Who is carrying the risk – Dubai’s unfinished construction projects is in the hundreds of billions of dollars

extract of original TheDailyMarverick

Some say the sum for Dubai’s unfinished construction projects is 400 billions of dollars , so who is carrying the risk?

Multiple reports state that Abu Dhabi will “pick and choose” how to assist Dubai.

As capital of the United Arab Emirates and home to the central bank that feeds the cluster of seven emirates, everybody is exposed to everyone else. Abu Dhabi pumps 90% of UAE oil, so that’s a big hedge. But just as Dubai World has subsidiary upon subsidiary, and extends its tentacles into state enterprises, parastatals, and listed firms, it’s hard to track where the fault lines lie in the patchwork that is UAE finances, and beyond into the markets of the Middle East proper.

Abu Dhabi’s own cost of insuring its debt against default has soared, from just less than $100,000 per $10 million, to more than $177,000. And while this number fluctuates with the desert winds, there’s no guarantee that Abu Dhabi will keep forking out money to save its emirate cousin. For now, though, the prospect of rising costs on its own borrowings appears to have galvanised Abu Dhabi into providing more cash to Dubai. Stock markets swelled after Abu Dhabi’s payment of $10 billion to its neighbour, with Abu Dhabi’s stock market clambering 7.9%, while Dubai’s benchmark index rallied 10%, the biggest single-day gain in more than a year. But this remains far below its level before Dubai World announced it wanted a hold on debt.

Reuters quotes Abu Dhabi people who say most of the über-emirate’s credit flow was too big, government-backed entities in Dubai, which helped collateralise Abu Dhabi’s own late entry into the wedding-cake architectural stakes.

“During those years, the property market was still in its infancy in Abu Dhabi, so like other banks here, we, too, diverted our credit to Dubai,” one Abu Dhabi bank executive said. “We have to face the stress that will be caused to our balance sheet and profit and loss account due to this exposure to Dubai World and associated companies because it is a default. Yes, we will have to take more provisions.”

No one yet knows where the debt really resides.

Western banks appear to have some $12 billion of exposure to Dubai’s unfinished building frenzy.

There’s a sprinkling of Islamic sukuk bonds, such as the one that funded Nakheel’s $4.1 billion of due debt.

But the market wants to know if Abu Dhabi’s latest $10 billion was a gift, or a loan, or came from the proceeds of a veiled asset sale.

Abu Dhabi recently launched a push to improve transparency and raise money overseas, to help fund its own 20-year development programme. And so far, the emirate has raised about $8 billion this year on international credit markets.

But last week, ratings agency Moody’s placed the credit ratings of several big Abu Dhabi companies on review for a possible downgrade, citing uncertainty over government support. And in the meantime, rival agency Fitch downgraded Dubai Bank, and also Tamweel – the largest provider of UAE real estate financing. It also downgraded Bahrain’s TAIB Bank.

Another motivation for Abu Dhabi helping out Dubai World is the company’s Dubai port operations, which it needs to market as a dependable global transport hub.

Dubai has got off lightly to date. But if the property market doesn’t return soon, hundreds of billions of dollars worth of skyscrapers and palm-shaped islands will remain unfinished hulks amid the dunes and warm waters off Dubai’s coastline.

more.

Read more: Barrons, Reuters, Guardian, The Wall Street Journal

Test Case for RERA Dubai – Investors file case with RERA over Dubai project delays

source ArabianBusiness
 A group of around 30 investors has filed an official complaint at the Real Estate Regulatory Agency (Rera) over ongoing delays and specification changes at the Vue de Lac and Vista del Lago developments in Dubai.

Investors on the Al Attar project at Jumeirah Lake Towers accused the developer of unreasonable delays and changes being made to apartments without the consent of owners, Construction Week Online reported.

“We have been promised the project since then end of 2007. It was then pushed to 2008, then the end of 2008, and now he’s saying 2011 – which will never happen, because up to date they’ve only finished the piling,” investor Makram Mohamed told the website.

Many asserted that apartment specifications have changed so drastically that they no longer wish to purchase property in the project and want a full refund.

Investors are unhappy at what was described in a letter from Al Attar as “some small changes”, where two-bedroom apartments have been changed to one-bedroom ones.

Al Attar had revised the prices of the apartments in line with the reduction in apartment size, but investors said that they had bought two-bedroom apartments specifically and a smaller alternative was not acceptable.

“Because of the change of designation and all of this delay, we don’t want this property any more. The majority of people investing were buying to live in this property. Ninety per cent of our group wanted to live in this. Now they’ve changed the designation, we don’t need it. I bought a two-bedroom; you can’t give me a one-bed plus study,” said investor Shailendra Sainani.

“The majority of us need our money refunded and the costs absorbed. [Al Attar] needs to resell the project from the beginning.”

In addition to changes in designation, many investors are also concerned that delays to the project will result in a huge interest bill arising from finance agreements that can only be concluded following apartment handover.

Some investors took out finance agreements in 2006 under the impression that the project would be handed over in 2008. They are now facing the prospect of paying five years’ worth of interest on finance agreements, should the project be delivered according to a new completion date of 2011.

Some investors also query Al Attar’s ability to deliver the project on time.

“Can we still believe Al Attar can deliver in 2011, if they couldn’t even start construction in the last three years?” said one investor.

The group has filed a case with Rera because they say that Al Attar Properties is refusing to communicate with them except through a lawyer.

No-one from Al Attar was able to comment on the case or development.

The case has now been filed with Rera, who said a decision on the steps it would take would be forthcoming in the next few days.

Now it getting agressive in Dubai ? – Hunting complaining Investors – Dynasty Zarooni Fraud – Kabir Mulchandani hit back with a counterclaim

http://www.ft.com/cms/s/0/64f5823c-f945-11dd-90c1-000077b07658.html?nclick_check=1

The executive at the centre of $100m fraud allegations rocking Dubai’s property sector has hit back with a counterclaim that his accusers have defaulted on more than $18m of debts owed to his company.

Kabir Mulchandani, chairman of Dynasty Zarooni, claimed that a series of cheques written by investors had bounced as the real estate industry’s fortunes plunged late last year.

The case – involving one of Dubai’s largest private real estate companies – highlights concerns that the emirate’s legal system is poorly equipped to cope with the slew of disputes arising as the sector turns sour.

Dynasty and Mr Mulchandani deny investor allegations of fraud and misrepresentation of the group’s property portfolio.

In an interview at Dubai’s Port Rashid police station, where he has been held since last month, Mr Mulchandani told the Financial Times he was pursuing cheques totalling Dh68m ($18.5m, €14.5m, £13m) that were written by Dynasty investors to pay for property. He claimed they bounced in late December as the international financial crisis hit the emirate’s business community.

He said: “Certain key investors who had issued post-dated cheques to us got caught in the financial trap. They could not pay.”

Mr Mulchandani said he suspected the investors whose cheques he alleges bounced – a criminal offence in Dubai – had made the accusations of fraud against him because they saw it as a way to recover money after the market fell.

Salem Al Shaali, who is representing investors claiming up to Dh280m from Dynasty, admitted some of their cheques had not cleared. But he said this was because his clients had decided not to honour the cheques because of their suspicions about Mr Mulchandani.

His clients had deposited cheques covering the money they owed, he added, showing that they had the ability to pay if their allegations against the company were satisfactorily addressed.

Hundreds of complaints have been made against Mr Mulchandani, but the initial claims at the heart of the case came from 10 individuals known as Dynasty’s “investment club”. Mr Shaali said: “Mr Mulchandani broke Dubai’s real estate laws by selling properties without a proper licence and misrepresenting construction progress at the buildings”.

Mr Mulchandani, an Indian national, said he was being well treated in custody but expressed frustration at the time taken to investigate a case in which he said he had “nothing to hide”. He is expecting a hearing this week over whether he can receive bail.

He said: “This is a wonderful country but … it is still gearing up to deal with these complaints, because this is the first time they have had a property meltdown.”

The Dynasty imbroglio is a further blow to confidence in Dubai as it scrambles to cope with the sudden end of a six-year property boom on which a good part of its modern-day wealth is founded.

More than 25 executives have been detained over the past year in anti-corruption investigations at state-linked property companies, while lawyers say more claims against private sector property developers are likely to emerge this year as prices collapse and funding dries up.

RERA Hits Back – Dubai RERA CEO said: “The investor should feel happy when he sees the authorities hit with an iron fist all those who put interests of the city and investors at risk.

http://www.7days.ae/storydetails.php?id=73857&title=RERA%20hits%20back

Dubai Real Estate Regulatory Authority (RERA) has denied receiving a letter signed by 300 real estate investors, developers and advocates expressing concerns over the fate of their investment in the emirate.

In their letter, they demanded RERA act before prices in the real estate market crash, according to a report published by Zawya Dow Jones news web site, which also blamed the RERA CEO of declining to comment on the issue.

Marwan bin Ghalita, CEO of Dubai Real Estate Regulatory Authority (RERA), branded the news as absolutely untrue. “Personally, I did neither receive a letter of this kind nor any call from the said news web site or other,” he affirmed in a statement.

He added that RERA could not have made any regulatory achievements in the real estate market if it had not been keeping regular contacts with developers, brokers and investors alike.

It was reported that the petitioners demanded RERA to take measures to bring the situation under control especially following recent financial investigations into several property companies, a move which raised questions about RERA standards.

Commenting on this, the RERA CEO said: “The investor should feel happy when he sees the authorities hit with an iron fist all those who put interests of the city and investors at risk. It’s illogical that such a measure could feed concerns… on the contrary it should send a message of confidence and assurance across the board.”

He explained that RERA had, since its creation about one year ago, been taking tremendous efforts to regulate the real estate sector by issuing flexible regulations at bar with the highest possible level of transparency.

Answering a question about a list being circulated on the internet about tens of cancelled or delayed developments, the RERA CEO affirmed: “The list was not accurate and not true simply because it was not issued by RERA, Department of Lands or any official relevant body. Those behind the list are only seeking to raise fears and panic so as to make narrow gains.”

Affected Dubai Property Investors started Petition to RERA Dubai in January 2009

to get more information please click on this link:

http://groups.google.com/group/dubai-property-investors/browse_thread/thread/8efbb7983955fc97?hl=en

 

the link to the letter, hand delivered Petition, to RERA Dubai Januar 2009, against Real Estate Practices that harm Dubai

http://dubai-property-investors.googlegroups.com/web/The+Petition144.pdf?hl=en&gda=EtP61kUAAABCDKK3M95qOHhW6MrAvHpOv6-qWixPv2gLwjFoEVch5D-z-44yj33cbUGq43XpXhMcn8WIbWh5zqeDKtDBmq67Gu1iLHeqhw4ZZRj3RjJ_-A

or

http://groups.google.com/group/dubai-property-investors/files?hl=en

Nakheel cuts staff, delays projects – The National Newspaper

Nakheel cuts staff, delays projects – The National Newspaper

Nakheel has made 500 of its staff redundant as it delays work on major projects including the Trump International Tower and Hotel on Palm Jumeirah, Waterfront, Palm Jebel Ali and The Universe, the company said yesterday.

The decision is another sign of the global economic slowdown affecting the property sector. Banks have tightened lending, prices have dropped and sales have slowed, forcing developers to review their expansion plans.

The job losses make up 15 per cent of Nakheel’s workforce, which now stands at 3,000, and follow at least four years of breakneck hiring.

Nakheel said in a statement that the layoffs were “a responsible action in light of the current global market conditions”.“The redundancies are indeed regrettable, but a necessity dictated by operational requirements which are in turn dependent on demand.”

In another statement, Nakheel said it was delaying long-term infrastructure work on some of its projects.The projects include Frond N villas, Gateway Towers and Trump International Hotel and Tower on Palm Jumeirah.At Waterfront, work on Madinat Al Arab, Venetto, Badra and Canal District is continuing as planned, but other phases will be delayed.

The company has already slowed reclamation work on parts of Palm Deira, the largest of the Palm island trilogy, while the pace of construction on components of Palm Jebel Ali is expected to slow.

Work on The Universe, a collection of reclaimed islands planned to be built between Palm Jumeirah and Palm Deira and launched in January this year, will also be restricted to preliminary engineering studies.

The statement said: “Nakheel is delaying long-dated infrastructure work on some of our projects in order to ensure that our business model is aligned to meet market demand. We have the responsibility to adjust our short-term business plans to accommodate the current global environment.

Work on all other Nakheel projects is ongoing as planned.”

Reclamation on The Universe was intended to begin by the end of this year and negotiations were under way with at least three contractors. The contractors now expect the project to be awarded much later. “We are in talks, but I think the contract will be awarded much later than December,” said one contractor. In the past month, almost 1,000 job losses have been confirmed by developers in Dubai.Damac Properties, the emirate’s largest private developer, laid off 200 of its 8,000-strong workforce, while 180 out of 350 staff at Tameer Holding, another Dubai developer, were told they would lose their jobs by the end of this month. Omniyat Properties also confirmed 69 redundancies from its workforce of 350.“It’s not unusual for companies to downsize during a recession,” said Peter Walichnowski, the chief executive of Omniyat Properties. “Also, if the skill-sets are not required it’s best for people to find other jobs that want and need them at that point in time.”Still, Omniyat plans to boost staff numbers in its customer care and facilities management divisions in time for the completion of projects, three of which will be handed over early next year.“We need to allocate resources into areas of the company that are more appropriate,” said Alex Andarakis, the company’s director of sales and marketing.Recruitment experts said that while there has been a slowdown in Abu Dhabi, redundancies have so far only hit Dubai, but are now trickling down to construction consultancy firms and contractors. According to Duncan Murray, a consultant at Duneden Recruitment, the situation has led to “too many people looking for too few jobs”. “Companies in Dubai are culling people left, right and centre,” he said. “It’s now a case of people not knowing each day whether they’re going to have a job or not.”And as developers and construction firms freeze hiring, recruitment companies are aggressively looking to place applicants in jobs elsewhere in the GCC.“People will just have to go to places like Qatar and Saudi Arabia if they want to work,” said Mr Murray.“It will be a lot harder for families, but people can’t afford to be fussy and they will also need to be more flexible and accept pay cuts.”Mr Murray predicted that it could be early 2010 before companies think about recruiting again.“It will be a difficult 12 months ahead,” he said.agiuffrida@thenational.aebhope@thenational.ae

Builders struggle to get payments – The National Newspaper

Builders struggle to get payments – The National Newspaper

Construction firms in Dubai are struggling to get payments from some developers as major projects stall and further doubt is cast over the feasibility of others.

Meraas Development, a company controlled by the Dubai government, became the latest to announce a review of a major development, the Dh350 billion (US$95.3bn) Jumeirah Gardens City project, in light of the global economic downturn.

It followed an announcement by Nakheel on Sunday that it was delaying work on projects including the Trump International Tower and Hotel on Palm Jumeirah, Waterfront, Palm Jebel Ali and The Universe.

The Jumeirah Gardens City project, which will raze the district of Satwa in Dubai to make way for a number of tall towers, a park and a canal system, was only launched at Dubai’s Cityscape in October.

“We are simply reviewing our business strategy, as well as the phasing and rollout of the Jumeirah Gardens project, to make sure the development proceeds in the most opportune way to meet changing investor needs,” Meraas said.The company said there would be more clarity on the project by the beginning of next year.Contractors including Dutco Balfour Beatty, Samsung Engineering and Construction, Al Habtoor Leighton Group and Murray & Roberts are among those working on Nakheel’s projects.

“We’re still reviewing things at the moment to see where we stand,” said Grahame McCaig, the general manager of Dutco Balfour Beatty. “Getting payment is worse than usual; we’ve really struggled to get paid by a lot of people.

At the moment, the cash issue is far bigger than the workload one.”

Al Habtoor Leighton Group, a joint venture between Australia’s Leighton International and Dubai’s Al Habtoor Engineering, had been working on the Dh2.9bn contract to build the Trump International Hotel and Tower in partnership with Murray & Roberts, a South African construction firm, since July.

The company is trying to recover costs now that the project has been suspended, but said last week’s Dh8.85bn contract win to build Dubai Pearl would help to cushion the blow. It is not yet known when work on Trump Tower will resume. “This is something we’re in discussions about,” said Chris Gordon, the general manager of corporate affairs and strategy at Leighton International. “We’ve been fortunate in that we’ve secured work on other projects, so that should cover things, and we can move staff on to those.”

Mr McCaig added that developers were legally obliged to reimburse contractors for costs incurred, should a contract be cancelled. “They either cover the costs incurred to date, or agree [on] a reasonable cost. It’s an important part of the termination process.”While Samsung Engineering & Construction, a South Korean firm, has not had any of its deals with Nakheel stalled, the company has been experiencing delays in payments on certain jobs.

“We’re getting delays in payment by about two to three weeks now,” said Beejay Kim, a senior manager with Samsung Engineering, which is also building Emaar’s Burj Dubai with Arabtec and BESIX Group.

Samsung Engineering is one of five companies that have been invited to bid for the construction of the kilometre-high tower, which will form part of the Dh140bn Nakheel Harbour & Tower development in Dubai, also launched at Cityscape in October.

Groundwork started earlier this year and is among Nakheel’s projects that are expected to go ahead. agiuffrida@thenational.ae

Negative equity, defaults ‘now a Dubai reality’ – Real Estate – ArabianBusiness.com

Negative equity, defaults ‘now a Dubai reality’ – Real Estate – ArabianBusiness.com

Negative equity and widespread mortgage default is already happening in Dubai, with repossessions also likely, property experts have said.

Banks ramping up interest rates on home loans coupled with falling real estate prices have hit buyers of off-plan property hard as the market cools in the face of dwindling demand due to the global financial crisis.

“The problems of negative equity and mortgage default are now realities in Dubai,” said Matthew Hooton, head of real estate in the Middle East for law firm Ashurst.

Speculators who bought off plan – property yet to be completed – during Dubai’s six year real estate boom are now faced with spiralling mortgage costs as lenders grow increasingly fearful over customers defaulting on payments.

Official figures from HSBC bank published earlier this month showed that the price of top-end apartments fell by as much as 30 percent in Dubai’s downtown DIFC district during October. Experts believe if growing numbers of homeowners fall into negative equity, there will be a rush to sell real estate.

“Where you get real problems in the mortgage market is when you get the double whammy high interest rates making mortgages unaffordable and dropping house prices,” warned Chris Dommett, CEO of mortgage broker John Charcoal’s Dubai office.“That would be exacerbated here because most of the population are not from here. “The incentive to cut and run is greater.

If somebody can’t afford to repay their mortgage and house is worth less than is owed, it is a double incentive to walk away because that person is not walking away from any equity,” he added.

Negative equity – a term synonymous with Britain’s housing crash in the 1990s – is when the value of the property is worth less than the mortgage. Banks in the region are also under fire from leading industry figures over hiking mortgage rates way above the interbank rate or eibor, currently at 4.31 percent, for three months.

Arabian Business revealed last week that banks including HSBC and the UAE’s largest home loan lender Amlak, have hiked interest rates on new mortgages by up to 2 percent and are now charging customers up to 9.75 percent monthly interest.

Ian Albert, regional director at real estate broker Colliers International in Dubai said:

“I object to banks racking up interest rates. It’s excessive. You’ve got this problem where the banks are almost self-defeating themselves. “If I borrow at 8 percent I need to lease my property at 12 percent, the greater my yield increases, the greater the property value is depressed.” Albert predicted that although repossessions will happen it was unclear how banks in the UAE are set up to deal with such a scenario.

Direct gov’t action called for to support property market – Real Estate – ArabianBusiness.com

Direct gov’t action called for to support property market – Real Estate – ArabianBusiness.com

RichVille, a real estate asset management firm, on Wednesday accused authorities in Dubai of not doing enough to support the faltering real estate market.The company, part of Dubai-based conglomerate Tharaa Holding, said in a report that authorities needed to take direct action to revive the market, which saw real estate prices fall four percent between September and October, according to HSBC.

The global financial crisis has hit demand for real estate in Dubai from foreign investors, which make up a large percentage of buyers, while tightening liquidity has made home financing more difficult.

RichVille blamed the downturn in the market on banks, which have tightened lending conditions in recent months despite the UAE central bank making 120 billion dirhams ($32.7 billion) available to the banking sector boost liquidity.“

The report held the banks in Dubai responsible for the inactivity of the real estate market, even though the central bank has taken measures to support the banking sector and the economy, no direct actions have been taken towards the real estate sector…”
RichVille said in a statement.RichVille said Dubai’s Real Estate Regulatory Agency (RERA) had to play a more active role in developing a rescue plan for the market.“

The report… suggested a rescue plan for RERA to play a much needed leading role that surpasses regulating and documenting, to cooperating with the master developers, government bodies, and main investors to develop a rescue plan…,” the firm said.RichVille called on master developers to delay any upcoming payments by six months to avoid default and “panic in the market”.

The Dubai government last week set up a committee to recommend ways to tackle the impact of the financial crisis on the emirate’s economy, including real estate and banks.Mohamed Ali Alabbar, chairman of Emaar Properties and of the new committee, said on Monday Dubai would pull back on its building spree in light of the financial crisis.

Property developers reassessing sales strategies

Property developers reassessing sales strategies

Dubai-based developers are putting sales of their properties on hold until the situation improves in the emirate’s real estate market, prominent developers said yesterday.”We will definitely reassess sales strategies in the light of the current market conditions. Everything is under review now and we have no new plans for the near future,” said Ali Mansour, Project Director, for Nakheel’s Palm Jebel Ali.

“There are no sales on Palm Jebel Ali happening as of now.

The only sales that happened were in the year 2003–2004,” said Mansour.Palm Jebel Ali is the second of the Palm trilogy being developed by Nakheel.

It is located right in the heart of Jebel Ali, close to the Al Maktoum International Airport and the Dubai Waterfront development. So far, Nakheel has sold 52 plots of land in the Crescent A, 504 units of waterhomes and 1,300 villas at development.According to Nakheel, Palm Jebel Ali will feature signature villas, garden villas and also a wide range of luxury apartments, town homes and penthouses.It is expected that around 300,000 people will live on the development.”Palm Jebel Ali has an advantageous location in a totally virgin area of Dubai.
By the time it is completed, the Al Maktoum International Airport would already have become operational.

Three phases of extension at the Jebel Ali Harbour would also be complete when the Palm Jebel Ali is delivered.

There will be some high-end and luxurious components at the Palm Jebel Ali, but the project will also have other components catering to various market segments,” said Mansour.Limitless, too, has not launched the sales of its Arabian Canal project. Ian Rainelan Raine,

Limitless’ Project Director for the Arabian Canal, said: “We will judge when the time is right to start selling. We have registered a huge amount of interest in the Arabian Canal project but we are not registering sales at the moment.”The Arabian Canal will be one of the longest man-made canals. The excavation of the canal will start near the Dubai Marina area and it will flow inland around the planned Al Maktoum International Airport. It will then meet the sea at the outer end of the Palm Jebel Ali.

Dubai Waterfront will be the first phase of the larger Arabian Canal effort. The developer said financing for the first stage of the project has been completed.

Policy review Rufi Real Estate, Dubai-based real estate developer, is revisiting its strategies and has deferred launch of some of its realty projects until the second quarter of 2009.”We were supposed to launch two residential towers in Meydaan and projects in The World, where we have bought three islands. But we have postponed all that for now,” Mehrooz Manzoor Rufi, Director, Rufi Real Estate, told Emirates Business.Rufi is optimistic about real estate prices picking up by the middle of 2009 in the emirate.Pre-sales take care of 40 to 50 per cent of construction cost and so the company need not look for external borrowing options, said Rufi

Dubai reassures creditors amid crisis – The National Newspaper

Dubai reassures creditors amid crisis – The National Newspaper

DUBAI //

As the world enters what appears to be the most formidable downturn since the Great Depression, with tremors being felt in the Gulf, the Dubai Government is reassuring its creditors and introducing measures aimed at supporting the property and financial sectors.
Mohammed Ali Alabbar, a member of the Dubai Executive Council, told an audience at the Dubai International Financial Centre that it was time to address the new economic reality.“We are rationalising our expenditures and consolidating our activities,” he said, adding that the country’s property industry would “see more consolidation, especially with third-party developers, who may be facing some lending difficulties”.

Mr Alabbar, who is also chairman of the emirate’s largest developer, Emaar Properties, said Dubai would be able to handle its debt.“The government can and will meet all obligations going forward,” he said, adding that the emirate had debts of US$10 billion (Dh36.73bn), plus a further $70bn with Dubai-affiliated companies balanced by Government assets of $90bn and assets belonging to state-backed companies of $260bn.
He added that a special advisory council had been established to look at each sector of the economy, in particular the property market. The committee is making recommendations to the rulers and will manage the “current and future supply of new projects on to the market” in a bid to slow the decline of prices. The moves this week to reassure the markets have come after large declines in the stock exchanges, a softening of prices of new homes and a first round of layoffs at many property developers — all developments that would have been unthinkable just six months ago at the height of the property boom.

The most dramatic development for the property market came earlier this week with the announcement by the Government that it would merge two banks and the country’s two largest home finance providers into a rescue vehicle called Emirates Development Bank. The new bank would receive funds from the federal government and become the largest provider of home loans in the country, Mr Alabbar said. A source close to the new bank said the move was the Government’s most comprehensive attempt yet to fight the crisis.

“This is the Government’s message,” the source said.

“We are providing full support to the key businesses.”In the past three months, the Government has pledged Dh120 billion to help banks fill the funding gap created when foreign investors began withdrawing their money from the region this summer. However, bankers have expressed reluctance to re-lend the emergency money to home-loan companies or real estate developers, for fear of exposing themselves further to a rapidly declining property market.
Amlak Finance especially showed signs of strain last week when it announced it would issue no new home loans until it had reviewed its credit policy. Other mortgage lenders have either stopped lending or cut their loan-to-value ratios dramatically, making it difficult for both buyers and speculators — now without any choice but to hold on to their purchases — to get financing. Cash flow at property development companies has all but stopped and distressed buyers have started offering discounts of as much as a third on the resale market.

The impact is already being felt at the biggest companies.

Emaar, whose shares fell 9.5 per cent in trading yesterday, has seen its share price drop by 83.4 per cent since the beginning of the year. Amlak and Tamweel, which have had their shares suspending from trading pending details of the merger, have lost 80.1 and 85.6 per cent since the beginning of the year, respectively.The decision to merge Amlak and Tamweel with Real Estate Bank and Emirates Industrial Bank into Emirates Development Bank is widely seen by analysts as a move to reverse the slide of the property sector by restoring financing for would-be buyers and speculators. However, both the Dubai Financial Market and the Abu Dhabi Index fell yesterday, 5.3 per cent and 3.4 respectively, with the property and finance sectors worst hit, indicating that investors remain sceptical of how effective such measures will be.

The new institution will “really be a strong entity”, Mr Alabbar said. “It means that this country is serious about consolidation during interesting times. This structure will facilitate the lending and move liquidity into sectors needed, especially in real estate.”He added the Government would be “cautious going forward, but will increase flexibility of real estate funding”.This is likely to be just the first in a number of takeovers, with a dramatic restructuring of the market still on the horizon, analysts said.
Sofia el Boury, a banking analyst at Shuaa Capital, said a wave of consolidations was likely in the market.

During downturns, “weak companies become ideal targets for acquisitions by profitable, highly liquid and well-capitalised institutions”, she said.
There is also a growing sense that a push to strengthen the federal union has been sped up in response to the credit crunch. However, Mr Alabbar rejected the suggestion that Abu Dhabi was preparing to bail out Dubai.

“It is not true,” said Mr Alabbar. “Dubai has received no offer either directly or indirectly from Abu Dhabi or any other party on earth,” he said when asked if Dubai’s assets were for sale.*

additional reporting by

Travis Pantinmailto:Pantinbhope@thenational.ae
shamdan@thenational.ae
afoxwell@thenational.ae

Property investors rally to the cause. – The National Newspaper

Property investors rally to the cause. – The National Newspaper

An amendment to a property law in Dubai has brought together a group of angry off-plan buyers who are fearful of losing a third of their investment to developers they believe may not even proceed with construction. According to the new amendment, off-plan buyers wishing to halt their payments have to cancel their contract and forfeit 30 per cent of the total value of the property, instead of only 30 per cent of the money they have paid.

The investors, who formed their group after an online forum on the issue, have yet to see evidence of construction on their projects and fear losing more of their money to developers in the current global slowdown if they continue their payments – but under the new amendment they could lose a third of their properties’ value if they do not. The new administrative circular was issued by the Dubai Land Department on Nov 10 concerning amended Law 13 on the pre-registration of off-plan properties, which was issued in August.

“Many investors have already paid 20 per cent to 50 per cent in projects which haven’t even started, hence they stopped payments in order to avoid further losses caused by possible bankruptcy of the developer,” said Tommy Carlsson, one of the organisers of the Dubai Property Investors group.

“Developers are misusing this interpretation of the law to terminate as many contracts as possible and forfeit our funds instead of finding solutions together with investors.”

Investors fear that developers who already know they cannot proceed with a project will keep the 30 per cent and then later on cancel the project without needing to refund buyers.

The group, which met for the second time on Sunday and is planning to hire a lawyer to represent them, is asking for two things. It suggests that before allowing a developer to cancel contracts, the developer must first submit the audit of its escrow to the Land Department. According to Law 8, developers must audit their accounts, but many of them have not done this yet. “We want developers to prove they have the ability to build,” said Nigel Knight, a co-founder of the group.

Second, contract cancellations should be put on hold if the client has already paid 20 per cent and construction has not started, with the payment plan proceeding only when construction actually starts.“We see that as the responsibility of the Government to make investigations about the developers and find out whom we can trust and who is not OK. We only ask the Government to protect us,” Mr Mohammed said. “We got e-mails from a developer saying we were not allowed to form a group. Somebody even tried to hack [into] our e-mail account.”

Among the developers that investors are concerned about is Schön Properties.

“Some people paid over 60 per cent of [Schön’s] Dubai Lagoon,” said Mr Mohammed, the co-founder of the investors group who did not wish to give his family name. “People ask why they should continue to pay. The developer hasn’t even started construction of their units. The developer is saying that if they don’t continue [to pay] they will cancel the contract and forfeit their money.”

Amlak and Tamweel to sign on the dotted line – The National Newspaper

Amlak and Tamweel to sign on the dotted line – The National Newspaper

Back-door nationalisation.

A sign of distress in the banking sector. A prop to spur further lending for home buyers.

These are just some of the varied reactions to the news that the country’s two largest home finance providers will merge under the umbrella of a federal bank. Analysts are also saying that this is the first major government intervention to prevent the worsening property economy from sliding further as a result of the global credit crisis – and a welcome move at that.

“The whole landscape is changing,” said Chris Dommett, the chief executive at the regional office of mortgage advisory John Charcol. “This makes a lot of sense right now. It shows the emirates are thinking on a countrywide level.”

Amlak Finance and Tamweel, two companies with roughly Dh25 billion (US$6.8bn) in assets between them, will merge and become part of Real Estate Bank, a relatively unknown entity with offices in Abu Dhabi and Dubai, wholly owned by the Ministry of Finance and Industry, the state news agency WAM reported on Saturday.

The result would be a new home finance provider that would “serve as the cornerstone of the mortgage market”, said one government official, according to WAM. However, one senior international Dubai-based banker said it was still not clear whether the two institutions’ main problems had been addressed. “In theory, it is a good idea. But how do you turn two institutions that are in a mess into one combined entity that works well? You just end up with one giant mess.

Both Amlak and Tamweel need to merge with a major bank because what they lack is funds, and banks have that from their depositors.

However, hardly anybody had heard of the Real Estate Bank until now. Is it well capitalised?

Nobody seems to know.”

Some observers credit the authorities with trying to do something, even if the outcome may still be uncertain. The move comes as the credit pressures on property developers and home finance companies have become especially acute.

Amlak announced last week it would stop issuing new home loans as it reviewed its credit policy. Prices have begun softening across the country and once vibrant salesrooms for new towers are patronised by only a trickle of would-be buyers. This has led to a first round of layoffs at property developers and delays of projects that have yet to begin construction.While speculators have been busy trying to get out of the market because price growth has slowed, many regular end-users are still out to buy a home. But without access to affordable loans, they too have been frozen out of the market.

“The business model of Amlak and Tamweel has collapsed,” said Mohieddine Kronfol, the managing director of asset management at Algebra Capital. “As mortgage companies, their business models relied on wholesale funding, interbank borrowing and syndicated loans. All those channels of funding have been compromised by the credit crunch.”Mr Kronfol said the new national home finance provider could begin offering more attractive home loans because it would probably have access to government funds.

The new entity might also have the ability to collect deposits, allowing it another way to keep financing going during down cycles. Amlak and Tamweel are not licensed to collect deposits.

The announcement will push the relatively unknown Real Estate Bank into the spotlight as a leading financial institution in the property industry.
The bank was set up in 1981 and made operational in 1999 to provide loans to Emiratis and government-controlled companies. According to its website, it has only 7,000 customers and was started with Dh2bn in capital. Amlak and Tamweel, meanwhile, have combined assets of Dh25bn and tens of thousands of customers. Combined, they promise to be the largest property finance firm in the Middle East. The problem is neither of them have any money to lend to home buyers.

Mahmood al Mahmood, the chief executive of Al Qudra Holding, hinted last week that Real Estate Bank could take an even larger role in the property economy by also lending to distressed property developers.“We have had this entity for years, but it has not taken a large role,” Mr Mahmood said. “Today, we have an urgent need for it… There are discussions to bring it on track to take part in financing some of the mortgage companies and real estate developers. It would extend facilities whenever needed.”

Still, the announcement appeared to raise as many questions as it answered. No details were given about the structure of the new-look Real Estate Bank or what would happen to Amlak and Tamweel during the merger.Raj Madha, an analyst at EFG Hermes, said the announcement was “extremely positive” for improving the operations of the two companies, but “the main question is what will happen to shareholders”. Like many such mergers, the devil will be in the detail.
Eric Milne, the head of banking and finance for the region at Simmons and Simmons Dubai, said “there isn’t much precedent” for this type of merger. He suspected the merger would need majority shareholder approval.The two main possibilities for shareholders is that they will either be bought out by the Government and the shares will be delisted from the stock exchange, or the shares will be converted into shares in the new company. Either way, the Government is likely to take a controlling interest.

The companies involved provided no further details of the merger. Wasif Saifi, the chief executive of Tamweel, said the company “had been given the details” of the merger under Real Estate Bank and “are just looking at all the aspects of it”.The merger marks the beginning of what is likely to be a series of consolidations in the property industry, analysts said.“We are still on the cusp of a downturn in the UAE,” said John McGaw, the chief executive of the regional office of Killik & Co. “This merger will create a stronger entity. It’s something that needed to be done.”
His optimism will be greeted with relief by government officials, but last night home buyers were demanding the answer to one question: when will the home finance market resume? “This is the one million dollar question,” said the governor of the Central Bank, Sultan Nasser al Suwaidi, said over the weekend.bhope@thenational.aetpantin@thenational.ae

First came a boom, then fireworks, but is Dubai’s property market in trouble? – Times Online

First came a boom, then fireworks, but is Dubai’s property market in trouble? – Times Online

For a few hours, the glitz and the glamour, the red carpet and, above all, the astonishing fireworks disguised the reality that is dawning over Dubai – but only for those few hours. Not even the £13.5 million extravaganza that launched the £1 billion Atlantis Resort could hide the fact that Dubai’s property boom, which has fuelled double-digit growth for five years, is showing signs of turning to bust.
“It’s been ten times worse than expected.

The liquidity is absolutely frozen. There’s no money. It’s just gone.

If the Government doesn’t act really quickly, we’ll slip into an Indonesian-style bust,” said one of Dubai’s leading bankers, who did not want to be named. He was echoing a growing consensus in the region. “These last six weeks have changed the face of the Earth,” he said.

Dubai’s property boom was fuelled largely by investors who bought properties off-plan. Most had no intention of ever living in the buildings, intending, instead, to sell them on and collect a tidy profit. Most also used borrowed money to finance their payments, according to analysts, intending to use a cut of their profits to pay back their loans.

But in recent weeks credit has virtually evaporated, with international and local banks tightening credit. International investors have grown nervous as local economists have downgraded Dubai’s economic outlook. And demand for properties has fallen into a slump, with job losses and the cancellations of new developments adding up.

A striking example of Dubai’s old and new realities was apparent last Thursday. As celebrity guests were whisked away by private helicopters from the Atlantis resort, residents on The Palm Jumeirah, the artificial island that is home to the hotel, were left to digest bad news. The value of their properties has fallen as much as 40 per cent since September, according to estate agents, as buyers struggle to secure mortgages. When the development, built by the state-owned Nakheel, went on to the market seven years ago, its luxury villas were snapped up by the likes David Beckham and Michael Schumacher for up to £5 million.
Today Nakheel estimates that British buyers own nearly a quarter of the villas on the Palm.

Last week Amlak, the country’s largest lender, said that it would suspend new loans completely because of a lack of funds, a move unprecedented in this market. Yesterday the Government merged Amlak and Tamweel, the country’s other top lender, into the federally owned Real Estate Bank in an effort to loosen lending by pooling resources.

“People have really begun to fear a crash in the market,” Chris Dommett, chief executive of John Charcol Dubai, a mortgage advisory firm, said. “Banks aren’t suspending loans because of a lack of demand, they’re doing it because they don’t have any liquidity. Transactions have just stopped and everybody is holding their breath, waiting to see what will happen.”

According to new data from HSBC, property prices fell last month by 4 per cent in Dubai and 5 per cent in neigh-bouring Abu Dhabi. The credit squeeze is having a devastating effect on existing buyers, who no longer are able to meet payments on their existing investment properties. “Anybody who’s bought into this market to flip property and make a quick profit – they’re all getting crucified,” another banker said, adding that several of his clients were trying to “wriggle out” of their contracts with developers for properties that they had bought off-plan.

Brokers are reporting a sharp increase in panic-selling. Last week the Dubai-based Elysian Real Estate sent a text message to up to 40,000 mobile phones advertising distressed property sales. The text offered a luxury six-bedroom, six-bathroom villa in Dubailand, a multibillion-dollar luxury theme park on the outskirts of the city-state, at an advertised cost of about £3.86 million – about half its original price. Robert Macnair, Elysian’s sales director, told The Times: “We have had a sharp increase in clients who are looking to sell because the market has done what it’s done. There is a new urgency to these sales.

“The market has slowed dramatically.

On a number of occasions, these investors or speculators actually can’t afford to make the next payment.”

Developers are also feeling the pressure. Damac, one of Dubai’s leading developers, cut 200 jobs last week. Nakheel has also said that it will scale back construction plans for its next man-made island, the Palm Deira.

Dubai is considering stronger measures to restore lending, but analysts say the market lacks the maturity to embrace them. Banks, for example, have been unwilling so far to tap into billions of dollars of emergency funding made available by the Government in recent months as the international economy heads for global recession.
Economists say that the Government needs to take a tougher stance. If credit does loosen, some predict a quick rebound.

Simon Williams, HSBC’s Middle East economist, said: “Real estate markets anywhere in the world are volatile . . . but they tend to work themselves out as the real economy tends to perform well, as it does in the Gulf.

“I still see very low vacancy rates across the UAE and rents are high. Those two key variables suggest that the property market will endure.”

Ratings agency puts ETA Group on credit watch – Real Estate – ArabianBusiness.com

Ratings agency puts ETA Group on credit watch – Real Estate – ArabianBusiness.com

Ratings agency Standard & Poor’s put Dubai-based ETA Group on negative watch on Thursday with a view to downgrading its credit rating due to concerns over the construction and property-dominated firm’s increased leverage.

Standard & Poor’s placed the firm, whose property division has a $10 billion portfolio, on CreditWatch with negative implications with long-term BBB- corporate credit rating, the ratings agency said in a statement.It also put a ‘BBB-’ debt rating on a $300 million senior unsecured bank loan due 2012 issued by subsidiaries Emirates Trading Agency, ETA Star Holdings, and Associated Construction and Investments Co.

The potential downgrade to junk rating is the latest indication Dubai-based companies are feeling the squeeze from tighter lending conditions, a fall in property prices and a collapse in investor confidence as the global credit crunch begins to sweep across the Gulf Arab region’s trading hub.”These actions are due to concerns over increasing financial leverage, the likely adverse effect of the continuing global economic slowdown on ETA’s cyclical activities, and low levels of headroom under financial covenants,” said Standard & Poor’s credit analyst Stuart Clements.ETA’s construction unit is the sixth largest UAE contractor, according to a survey by London-based MEED magazine.

Its real estate arm ETA Star Properties said in October it planned to sell Islamic bonds worth up to $200 million in the first quarter of next year to fund expansion in North Africa and Europe and was planning to develop residential and office towers in the Russian capital Moscow with a value of $600 million next year.”

ETA’s debt levels have risen significantly in recent years to meet increasing working capital demands from both higher commodity prices and the company’s rapid growth in revenue,” S&P said.The group also operates in mechanical engineering, car trading and shipping – all sectors “considered to be highly sensitive to economic conditions”.”The recent collapse in prices in the dry bulk shipping market (81 percent of ETA’s fleet), of about 90 percent from the 2008 peak, may put pressure on some of its time charter counterparties and lead to some renegotiations,” S&P said.S&P will conclude the CreditWatch within 90 days.

ETA Star executive director Abid Junaid could not immediately be reached for comment. (Reuters)

Property Scandal -Dubai developer demands up to 88% increase on price to pay construction costs | Dubai Property

Dubai developer demands up to 88% increase on price to pay construction costs Dubai Property

original published: AME info
http://www.ameinfo.com/176241.html

The company behind the Prodigy development in Dubai’s Jumeirah Village, MiNC, has sent a letter to investors asking for extra capital to cover construction costs after cash flow shortages caused by the withdrawal of project financing by the two funding banks.

The letter from MiNC’s CEO explains the company’s financial situation to investors. MiNC says that despite the land purchase being finalised in October 2006, Nakheel only actually delivered the land for construction in May 2008. This has led to: ‘
A significant negative impact on the project; a doubling of construction-related professional fees and a large increase in government imposed costs.’ In addition: ‘The arrival of the global financial crisis has had a severe impact on the monies MiNC has available to build Prodigy 1.
We are no longer able to subsidise construction of the project; the project needs to be self-funded as originally intended.’

MiNC faces two further problems. New regulations introduced by the Dubai government have meant that the company’s original economic blueprint of using finances from the whole project to fund construction on Prodigy 1 is no longer legal. This has then been compounded by the withdrawal of project financing by two local banks.

Difficult financial situation’We are in an extremely difficult situation,’ Simon Everest, Director of Operations at MiNC told AME Info. ‘Banks have pulled all the finance, so we have the choice of either sitting, doing nothing and waiting it out, like some of our competitors are doing, or we need to find another solution.’ The problems have meant that though most of the units in the seven towers have been sold, and the company’s escrow accounts are up to date, the project is no longer financially viable. MiNC claims that it would make a ’significant and material loss if it were to build this project’ and it ‘can no longer afford to subsidise this loss’, according to the letter sent to investors. As an example, MiNC is asking buyers to pay an additional Dhs326,000 on units originally sold to them for Dhs370,000, a mark-up of 88% on the original price.

The developer also asks that investors pay the increase up front, with the remaining instalments as per the original terms.
The charge will then go to pay for construction costs. In return for this the company is trying to mitigate buyer displeasure by guaranteeing 8% rental returns on the increased purchase price. MiNC is also playing on the fact that, at Dhs1,000 per square foot, the units are still below market rate. ‘The market is short of new buyers at the moment and as they cannot sell at a higher price, they are in effect re-selling the same apartments back to the original owners at an increased price!’ an investor in the project told AME Info.

‘When we spoke with their London office, and contacted their Dubai office, the only options were – give us the money we have asked for or lose your apartment and 30%.
MiNC are saying that per the new law they will be able to retain 30% of the purchase price, even though we are not in default of payment.‘
Responding to this comment MiNC said: ‘We do not intend to confiscate all or part of clients’ deposits, and have not in any way threatened our clients in this regard.’

Permanent suspension of workThe letter continues: ‘The current economic climate and the impact on the property sector are unique… Events outside our control have forced us to make difficult decisions. We believe that our proposed course of action will help us meet this target [of delivery in June 2010]. Failing this, we fear that the project will be suspended, possibly permanently.’ The response from investors contacted has been understandably negative so far, with many refusing the terms: ‘If I wanted to buy an apartment at Dhs1000 per square foot back in November 2006, I could have put a little more in and bought in the Marina. As an investor in this company, I feel like I have been robbed of my savings and profit.

I have looked at the market and apartments in Jumeirah Village are selling for under Dhs1000 in the current market.’ If the response by even a large minority of investors is negative then MiNC will not have the funds necessary to begin construction and those who have advanced the extra money will have their funds returned and the company will wait for bank funding to resume. ‘We initiated a meeting with the Land Department to get them to intercede on our behalf with the banks,’ said Everest, ‘and they put pressure on them but we’ve had no joy. Our next move if the buyers don’t accept the deal is to return the money, sit it out and wait for financing. But it is our intention to build every single one of the units.’

UPDATE: Subsequent to the publication of this article MiNC has issued a statement to AME Info stating: ‘We have taken steps to reduce the premium requested from clients to a maximum of 30% or Dhs200,000 (whatever is the lower), as a handful of purchasers that bought at pre-launch prices (less than Dhs600 per square foot) have rightly pointed out that the premium requested of them was excessive.’

Dubai developers are in denial

Dubai developers are in denial

Some of Dubai companies are in “denial” about the viability of projects in light of the global financial crisis, according to the CEO of Depa “
We are at the denial stage where lots of developers know for a fact that their projects should be cancelled and they’re either not announcing it or they’re saying it’s going to be delayed,” said Mohannad Sweid, speaking on future Dubai growth at the Nasdaq OMX Investor Conference.

“We cannot deny the effect [the crisis] has been having, we are a part of this world and I believe it’s just not right to say we haven’t seen any impact,” he added.In its capacity as an interior contractor in the Gulf region, Sweid said Depa had seen a lot of project announcements that had not necessarily been fully researched and he expected these to stop as the crisis takes hold.”

What we have had in the GCC in the last three years is the difference between reality and non-reality.

“Our market research showed there will be 280 new hotels built over four years within the GCC. That was advertised all the time… If we look at the reality – how many hotels have been delivered – it’s hardly more than five or six hotels a year,” he said.

In terms of risk to his own firm, Sweid was confident that infrastructure projects would still go ahead.”In this region, a lot of infrastructure is not developed yet and these elements of infrastructure have to be developed – it’s not a choice,” he said, citing Dubai’s new metro system as an example.He added that DepaDepa was still on track for growth for next year, but the “fears” were for 2010 and 2011.
© 7Days 2008

Real Estate Agents: Dubai Boom Is Ending

http://blogs.wsj.com/economics/2008/10/27/real-estate-agents-dubai-boom-is-ending/

Stefania Bianchi, Mirna Sleiman and Stefania Bianchi report from Dubai for Zawya Dow Jones.

A six-year real estate boom in Dubai that spurred a $475 billion building frenzy has ended, according to agents who say sales are collapsing amid fears that the global economic downturn will hit the sheikdom.

“Last month was a real disaster and worse is coming I guess,” Mehdi Zoghbi, an agent at Middle East Real Estate Consultants, told Zawya Dow Jones Sunday.

Zoghbi says that desperate sellers are now offering off-plan properties on the secondary market for a zero premium, effectively accepting a loss on their investment in order to offload quickly. Dubai, the first Gulf sheikdom to allow foreigners rights to buy homes, may also be the first to see a crash in property prices.

“Our commissions have fallen by up to 70% recently,” said Khaled Daji, an agent at Al Jabal Real Estate. “The most hit are the projects under development and those luxurious high end. We plan to survive for another six months to see how this crisis unfolds.”

But the city’s biggest developers like Emaar Properties PJSC and Nakheel are adamant that sales remain robust. Mohammed Alabbar, Emaar’s chairman and one of the architects of Dubai’s real estate boom, said in the company’s third-quarter statement that “we are very confident of our company’s fundamentals and future growth.”

That hasn’t stopped investors dropping the company’s shares. Emaar’s stock has fallen 62% since the beginning of the year, that’s more than the 48% fall in the Dubai Financial Market’s main index over the same period, according to Zawya.com data. Earlier this month, Colliers International said the growth of property prices in Dubai slowed to 16% in the second quarter of 2008 from 42% in the first quarter. Morgan Stanley warned in August that property hotspot Dubai could see a 10% fall in prices by 2010.

A collapse in real estate prices will add to pressure on Dubai’s economy, which doesn’t benefit from the vast oil income enjoyed by neighboring Abu Dhabi. Property and construction are estimated to account for about 30% of the emirate’s economy.

Meanwhile, the nerve – and wallets – of Dubai’s shoppers will be tested this week when, against a tide of global economic woe, the region’s largest shopping mall opens. Covering an area of more than 50 soccer fields, Dubai Mall will have more than 1,200 shops; one of the world’s largest indoor gaming arcades; an Olympic-size ice rink; the world’s largest indoor Gold Souk; and one of the world’s biggest aquariums, which will be home to more than 33,000 types of sea life, including over 400 sharks.

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Global recession resulted global oil, housing, commodities asset prices bubbles burst, plunge more than 50 % will be spread into oil consuming and oil producing countries
details on
www.osawh.com/mortdefa.htm
www.osawh.com/GCaptbj.html

Comment by Warren Huang – October 27, 2008 at 7:19 pm

cool article

Comment by hue g. rection – October 27, 2008 at 8:06 pm

Stefania and Mirna, thanks for this article. Interesting to see how other people are living and investing.

Comment by tom a taxpayer – October 27, 2008 at 11:08 pm

A fall in prices may actually benefit Dubai in the long term.

The escalation in cost of living in Dubai, driven by property and rent prices, has become unsustainable.

And speculation will end leading to more realistic valuation of assets.It has clearly been a speculative market when a

down payment of 20 per cent provides a 100 to 150% per cent in a less than a year from property flipping.

Comment by Dave Stern – October 28, 2008 at 12:35 am

As someone who lives “on the ground” here in Abu Dhabi, I can tell you that Dave Stern’s comment is incorrect:

the locals have been taking out personal bank loans to cover just 2 to 3 month’s mortgage payments and then

flipping properties within that time (not a year!).

They were buying up to six properties at a time in this manner.

These purchases were all “off plan”, the properties were not even under construction.

This is why the real estate market was, ultimately, unsustainable.

Comment by Jan Newton – October 28, 2008 at 1:02 am

I have been a doomsayer of the Indian real estate market when I predicted the fall in February 2008 -

 http://www.eclectic-investor.blogspot.com
The Arabic leverage is up to 100 times capital. I have personally know of business center receptionist

doubling up as a “real estate flipper” and now has overleveraged and stuck in properties that are not even

under construction. It is normal for authorities to blow their trumpets, but expect their sounds to end in a

Big Blowup in their faces.
A cataclysmic disaster and perhaps the start of Dubai’s fall like Beirut before and Aden even before that.

Comment by Cataclysmic Collapse of Dubai Expected – October 28, 2008 at 2:26 am

Castles in the sand?

Comment by tom a taxpayer – October 28, 2008 at 2:50 am

Currently panic is ruling the markets all over the world irrationally.

There is no exception, however, the Arabian Gulf have strong economic fundamentals and the recovery

will be much faster than in the West. As a matter of fact, the Q3 financial results of the biggest market players

for the are better than the Q3 results in 2007.
From the position of commercial property broker in Dubai, I can assure you that corporate end-users are good

clients at the moment. We have sold office floors in Business Bay during the last month and recently preparing t

he transactions of commercial properties in Jumeirah Lake Towers.

In times of crisis there are losers and winners.

Comment by Gergana Mineva – October 28, 2008 at 4:33 am

When junk emails started arriving in one of my “special” email boxes – promising pie-in-the-sky

pre-construction deals in Dubai – went Short Oil and Emerging Markets ETFs (Thank you, Goldman oil analysts!!!)

Comment by Federales – October 28, 2008 at 6:23 am

Mr. Gergana Mineva!
It is Persian Gulf not Arabic.
Please use always the correct name in the future.
Thank you!

Comment by Farhad – October 28, 2008 at 7:21 am

Farhad, Dubai is essentially ruled under Shirah Law, a cruel brand of despotic fascism that harms

women and children and is antithetical to freedom. Dubai though more “progressive”

than most repressive regimes in Sand Land, hates Jews and will not allow the

practice of such a “heinous” religion as Judaism. Yet you are worried about words and nomenclature.

Words are meaningless, actions are all that matter.

Comment by Kafka – October 28, 2008 at 8:32 am

OPEC’s manipulation of oil prices and speculators caused this current recession by increasing oil prices to historic levels.

Comment by Blame OPEC – October 28, 2008 at 11:16 am

Market is certainly undergoing a correction but to predict doom is a little foolhearty.

There is TREMENDOUS liquidity in the market and the reserves built up during the period of

high gas prices will certainly be deployed to stablize the realestate market which is the cornerstone of ‘

New’Dubai. Also, Dubai is NOT ruled by shariah law. In fact, it is one of the most modern states

in the gulf and is known for its liberal political/social environment (recent stories about sex on the beach

 not withstanding). There are a number of very successful american jews in the city so the anti-semetic

claim is just rubbish. There is no law against practise of ANY religion.

Visit the region before speaking

Comment by DubaiDreamer – October 28, 2008 at 1:33 pm

The smart money has begun the pull out already. Bank lending is drying up.

The only ones who continue to believe that the real estate market will go up are real estate agents

and speculators who have not been able to off load so far. The secondary market for off-plan properties is in a free fall.

And no amount of deliberate project delays and throwing people out of villas is going to prevent the serious

correction that Dubai property so badly needs. It has been the most speculative, unregulated and unprotected

market the past 6 years.

Comment by Kingsley – October 28, 2008 at 1:55 pm

couldn’t have happened to a nicer group of people…

Comment by charlie – October 28, 2008 at 2:13 pm

Gee, I guess the Arabs are poor for a reason = incompetence.

High oil prices masks the basic incompetence for awhile. But stupid is as stupid does.

Comment by CaliPOWER – October 28, 2008 at 2:17 pm

Cry Out Loud and you all say what you want about dubai …BUT The truth is: We Are All Loooosing!!

The whole world is sinking…

Comment by The True Man – October 28, 2008 at 8:44 pm

Kingsley makes some good points, Dubai is in need of regulation.

Prices may be predicted to fall, but it isn’t happening yet in the rental market.

Buyers have bought up so much of the properties and now are holding them until they can get

their desired selling price (usually expected 20% increases from sale to sale)…leaving the rentail market

struggling. Landloards can demand rents starting at $25,000/yr in ONE payment upfront for 450 sf studios…in empty,

 construction sites of buildings! Dubai is leaving no room for renters & the middle class.

Rents are still exorbitant and there are few regulations in place to support the renter.

Comment by MRODubai – October 28, 2008 at 11:40 pm

As someone who lives and breathes real estate since its first days here in Dubai,

I feel it is necessary to see the cause of the boom and only then we may be able to make some

calculated estimates of the future market condition.
1. Dubai real esate growth was based on a promise of freehold, residence permit, tax free benefits

for nationalities who have certain restrictions in their countries and saw dubai as a safe secure investment opportunity.
2. Government of dubai removed the residence permit guarantee by buying a property.

So automatically no tax free status, coz if you are not a resident of Dubai you can not open

bank account & you are still liable for taxes in your country.

Comment by real estate expert – October 29, 2008 at 12:21 am

3.Nakheel/emaar/dubai holding factor: All these companies hate each other and therefore fight for the

attention of sheikh mohammed, which means the greed and ego overtake logic and feasibility!!! result:

Excessive lands/properties/ mega projects without proper planning & infrastructure in place.
4. Universal law supply Vs. Demand: nobody realises that the already anounced projects in dubai will need

about an extra 6 million people to live in it!!!! (From Lagoons, meydan, dubailand, tatweer, mizin,

industrial projects, emaar, bawadi, the world, the universe, palm deira, port rashid, waterfront, arabian canal,

dubai world central….)Excuse me thats almost double the UAE population.

Comment by real estate expert – October 29, 2008 at 12:29 am

5. Loose the Confidence You loose everything: The investors/buyers are wakening up to the reality & there is

absolutely no confidence in the market not only because of the global financial crisis but mainly because of the

over supply & fear of the crash.

6. Genius Government policies: dubai government is its own worst enemy, at times like this what does dubai do?

They launch new mega projects & new development companies like meraas with ambitious projects that will only

further dampen market confidence.
7. Investor’s security: Dubai’s judicial system is as good as any underdeveloped country with selective rights

depending who the complaint is against.

Comment by real estate expert – October 29, 2008 at 12:35 am

8. No human rights when it comes to dubai police. infact torture and enforced disappearance has become

common in dubai under the umberella of the state security they can attach anything to anyone to reach their

commercial targets.
9. Everybody owns 20% of several properties: Paying a few installments does not make you theowner so when the next installments come due and there is no quick sales like the good old days, what happens? Sell below the price or lose your deposit with the developers…. results in what we call “stress sell”

Comment by real estate expert – October 29, 2008 at 12:40 am

10. Oil prices & Inflation: ofcourse oil prices doubled so did the cost of steel & cement & food & labor

accomodation… result abnormaly increase in construction prices on a weekly basis!!!… so an increase

in property prices due to rising cost….
11. Decrease in Oil prices: Sudden decrease in everything from food prices, to raw materials…..

creating sudden panic as properties are cheaper to build and a fear of further reduction is iminent.
12. There are too many chefs in the tiny real estate kitchen of dubai, have you noticed there aren’t any

happy faces in the media anymore!!! what happened to the so called international anouncements about their acquisitions…

Comment by real estate expert – October 29, 2008 at 12:45 am

13.The Sheikh factor: when the ruling family is desperately getting into everythng from real estate,

to owning or managing coffeshops and bakeries, landries…. then the opportunities for the public is becoming less

and less which means a lot of unhappy UAE nationals and residents…. which everyone know will not help the already

unstable state of dubai.
14. Big brother factor: let there be no doubt Abu Dhabi will eventually overtake dubai for the right reasons.

 money is not an issue thanks to oil & there is no rush to sell everything just to raise funds for the previously

anounced project like in dubai. Dubai’s power in UAE will be reduced due to lack of funds, money talks!!!

Comment by real estate expert – October 29, 2008 at 12:51 am

15. regulatory body with no teeth: RERA is supposed to ensure that developers/real estate agents

/ landlords/ follow the rules and regulations… what happens if a developer or an agent does not follow the law?

 NOTHING… just a 100,000 fine… comparing to the hundreds of millions at stake its a drop in the ocean.
16. Public Prosecution & Corruption: Everything in public prosecution is relative & variable…. there are

cases of misrepresentation by nakheel, for example selling thousands of villas

 and after 2 years just cancelling the project…. nobody can make a complaint.

Likewise several private developers & real estae agents operating in a fraudulent manner are let go off the hook.

Comment by real estate expert – October 29, 2008 at 1:54 am

Take away the speculation and in the end it comes back to fundamentals. Rental yields on finished

properties are currently 2-5%. Interest rates on property loans are 8-9%. Deposits on property

purchase are 30% minimum. If you want to buy a 2 bedroom apartment in a decent location you

would need to be earning US$200k to meet the lending criteria. The stock market in the Gulf has

fallen 25% in th elast 30 days and real estate stocks by 60% in 9 months.

Look for similar movement in property values.

Comment by steve – October 29, 2008 at 5:20 am

Main reason dubai eco will collapse is the RUSSIAN factor.

Comment by GB Bajaj – October 30, 2008 at 1:58 pm

The comments entered by the real estate are very impressive/ Truly an expert.

Comment by Admirer – October 30, 2008 at 4:08 pm

Great comments by the real estate expert as i call dubai an artificial market. There is onemore important point

that expert forgot is what will happen after Sheikh Muhammad as UAE history says e.g.Sharjah.

Advice to all expat go back to your homeland and serve for your country as Dubaidoes not have a

nation like Oman, Bahrain , Kuwait or KSA.

Comment by Fact Finder – October 31, 2008 at 7:18 pm

Well it seems everyone here is pretty sure that Dubai Property Market is done and huge Crash is in Pipeline

(or is already there). Well no matter how much we want it but it’s not entirely Ture. The Factors Mentioned

by “Experts” here does not have much impact on property market. Property Market depends on

three important factors. 1) Creations of new Jobs and thus Movement of New People to area

2) Amounts of loan banks willing to give 3) Pricing of the property
In Case of Dubai, Companies are still very much eager to open up an office here which saves them 30% to 40%

in direct Tax fromtheir own Country. That Means new companies, new Jobs, new demand.

Comment by Real Estate Investor – November 1, 2008 at 8:56 am

it is easier to open an Office in Dubai than Buying BMW in U.K. It Still Costs AED 10,000/-

and every employee gets residence visa (AED 8000 per employee for three year) hence TaxFree status.

Dubai Government investing in own companies E.G opening up Hotels, Telecome, Café and everthing

else is also very Good for Dubai. Since 30% to 40% of Dubai’s Expat population

work in these Companies shows how serious Dubai Government is in bringing people to Dubai.

The 2nd factor is the bank Finance and that’s a problem right now. Due to Global Crisis Gulf Banks have huge

Liquidity problem and that’s the reason they have Stopped Finance,(Yes Stopped) Most Banks have Already

Reached their Yearly tar

Comment by Real Estate investor – November 1, 2008 at 8:57 am

Most Banks have Already Reached their Yearly targets of cash outflow and Simply don’t have cash for mortgage.

Hence the finance buyer which is about 60 to 70% of market cannot buy. BUT from Jan next year Banks

will have fresh cash and hence finance will be back on track. Since Finance will be back the property market

will tend to rise again.

The 3rd Factor Pricing – Yes Dubai prices had increased on massive pace and yes things were gone

up really fast but still prices were not par will other countries (similar metropolitan cities) and now

with the correction in property prices due to the Financial problem the prices are even more attractive.

Comment by Real Estate investor – November 1, 2008 at 8:58 am

No place in the world can sustain to grow above 40% annually but prices only crash only when the demand dries up. Like in U.S and U.K where most citizen already own a home and new migration is only 1 or 2% of population where as in Dubai its at 28% to 40% every year and most people here still live in rented houses. Now with that kind of new people market will not crash but yes the growth can slow to 10% to 15% will is more realistic level.

But everything’s not that great also, Dubai Needs to a lot more to keep growing and attracting

more expats E.G Allow more foreign ownership in local companies, give more Rights to expats,

and introduce permanent residency with work permit.

Please let me know if some one thinks the other way

Comment by Real estate Investor – November 1, 2008 at 8:59 am

The UAE is now a ‘Buyers’s Market’ and I hope developers improve incentives such as back-loaded payments plans etc.

Real Estate Dubai

Comment by Andrew – November 1, 2008 at 1:32 pm

in dubai…reality is, the dubai govt thinks just like any other govt in the world i.e. india, usa, uk, japan etc.

nothing is done in dubai unless its severely needed [i.e. metro] and then its splashed with every god

damn adv from lipstick to lingerie to condoms to repay the loans taken for it. Y?

coz dubai govt HATES HATES HATES to pay for it from its pockets.

Comment by analyst expat – November 1, 2008 at 3:45 pm

To the “Real estate Investor” who does not have a clue of what this place is like: re-read the comments

by the “real estate expert” and by “Fact Finder” and then get rid of your investment as fast as you can and while you can.

Yes, you would be safer if you were in Kuwait for instance, but not here. Get out of your circle and talk

to others and get to know the real picture. Does “Pirate Coast” mean anything to you?

Comment by Yet another fact finder – November 2, 2008 at 1:01 am

Dubai has been trying to imitate the West for a long time now.The current situation is a predicted end to its Western dreams

Comment by Shaiju Janardhanan – November 2, 2008 at 6:10 am

excellent article… it’s so nice to read objective and realistic articles (and comments) about dubai and

their real estate market. i’m absolutely sick of reading blatent property (or any other) propaganda in Dubai’s “Newspapers”.

Comment by michael – November 2, 2008 at 6:55 am

i have read your article. wish to know few details regarding the Rental Index on Residential & commercial Properties.

There is a situation which were i have (a tenant) is going through tough time in Dubai

i have rented a Shop inside a Shopping Mall from past 4 years which was running in losses.

From 10 months the customers have raised and he was doing the Breakeven.

Suddenly the Mall is sold and New Landlord is asking for New RENT 40% increase and he is showing a

document of RERA stating landlord can increase the Rent to Market Rates.
i have put all his money in the business and may go bankrupt incase the situations goes out of hand
NEW LAND LORD IS AWROSTAMANI REAL ESTATE

Comment by Qurashi – November 5, 2008 at 7:26 am

Hi guys, am glad some of the readers find my comments useful. I just would like to add that god forbid if

anything actualy happens to our “super man sheikh” (Sheikh Mohammed) the entire wolves surrounding

him will start eating each other as history has shown in the gulf.
HSBC & lloyds TSB have stoped giving out mortgages to apartments in dubai what does that tell you?

PROPERTY CRASH is inevitable but the question is how hard it will hurt the government who has nothing in the account.
I hope I am wrong, but rumor says sheikh mohammed has had a stroke and an operation.

God help all those who still continue to dream and believe the wonderful animations of dubailand and nakheel!!

Comment by Real Estate Expert – November 11, 2008 at 10:44 am

The real estate market in dubai has crashed already. I bought a few floors from Dynasty zarooni’s sheffield project in dubai waterfront at 2700 dhs per square feet, today i can not sell it 30% below the purchase price. Why because Dynasty Zarooni does not even own the land & they don’t even have an escrow acount, yet people have paid over 20% to their acount and there is no construction on site. RERA knows about it but does nothing.

Comment by Dubai Resident – November 12, 2008 at 2:54 am

Really impress with your knowledge Real Estate Expert. Keep us updated to whats happening in Dubai Real Estate and when it will be a good time to buy probably an year from now.

I am based in Canada real estate here is doing reasonably well small 5% correction which is normal and acceptable.

no major job losses or recession predicted yet Canada has a sound economy.

Comment by Real Estate Crashing – November 15, 2008 at 4:03 am

The nightmare is here…Great analysis by Mr. “Real Estate Expert”

Comment by Dubai Nightmare – November 16, 2008 at 6:50 am

It’s time that speculators lose something. Earning hunderds millions was not normal.
I never believed Dubai, never, it was bluff, very well supported by propaganda. Crisis will clean it up.

Comment by Azizi – November 19, 2008 at 8:11 pm

I wish real estate expert had published these comments in dubai dailies… thousands of small investors

like myself would not havebeen trapped in unrealistic promises.

Today my property is worth 40% less than what I bought it 4 months ago.

I blame the government for bringing so many projects into the market and killing the confidence.

Why are they quiet. Real estate expert how can I get in touch with you for some advice… email?

Comment by Silvia – November 20, 2008 at 3:35 pm

In the 1980s and 1990s, Dubai used to be such a fun place to live in. Good medical, good salaries, good savings.

Today, expats are lucky to save even 5% of their income and stress levels have gone through the roof.

Traffic jams 24 hours a day, near impossible to get street parking, a 45 minute wait to get a taxi.

Indirect taxes in the form of extremely high rent and huge fees on everything related to living in Dubai.

Before, people treated you for who you are. Now they treat you based on what you drive, where you live

and how much you earn. Dubai is no fun to live in anymore, rather it is a materialistic society amidst an ugly

 poorly planned concrete jungle where the rule is eat or be eaten

Comment by Ex-Dubai Expat – November 21, 2008 at 6:35 am

Fortunately avoided the market here as I read the contracts and evaluated the risk given the emerging legal infrastructure.
Very little sympathy for those that bought, as they knew that the potentially high returns came with equally high risk.

Unfair to blame the Gov’t they have been putting the right regulatory structure in place, but this usually takes years.

The region needs a Dubai and I have no doubts it will be a regional powerhouse.
In the short run I expect an 80% drop in values, much like Singapores correction in the late 90’s.

Comment by sulli – November 21, 2008 at 6:40 am

Been in UAE since 1994 but lost the bull market due to over protectiveness any way nothing to cry for,

can see one more coming in the near future as I have seen these happening in the past, unlike India from

where I come from, Dubai is not seen as a permanent residenence for most of the expatriate community

residing here, Most of us especially Indians are phobic of the locals and have been taken undue advantage

by the local youths and some most of the GCC expatriates and in my personal experience worst among these

are the Palestinians who seeems to have no respect to another human being now saying that, since no expatriate sees

UAE as his future home but a stop gap arrangement to make a

Comment by Lost Bull – November 24, 2008 at 2:26 pm

quick buck, which attracted the soldiers of fortune around the world, and persons with questionable past and

 present but with a huge wallet even though there were some sort of regulation put in regarding the money transfers,

there seems to be money flowing in from every were, Now in India we have a huge population and we have absolute

need for housing even it is rare to see such an mega project as in Dubai even with some of the worlds richest persons residing

there, Anyway before coming over to Dubai I used to travel around the world and it surprised me in 1994 why

Dubai did not have MRT which was very much common even in small countries such as Singapore,

And it surprising and at the same

Comment by Lost Bull – November 24, 2008 at 2:44 pm

extremely frustrating that you cannot travel back in the same taxi of other emirate unless you have engaged

 it for a round trip, about just 2-3 years back an inter emirate buses started plying the roads.

Once the real estate market started selling there were lots of people rushing in to buy assuming that they can forsee

a stable future with permanent residence visa status if they bought a free hold property which did not materialise,

again the only option that was left for all to make a quick buck when the boom lasted, Extremely well marketing tools

 were used to attract people from all over the world with a promise of living on beach life style, and compared the

prices to the major cities

Comment by Lost Bull – November 24, 2008 at 3:00 pm

found it to be cheap minus the infrastructure to support such a rapid developement, due to all projects going on simultaneously,companies ,man power, machinery and materials started flowing in and competitiveness within the developers started pushing the price upwards, speculators started rushing in prices went beyond the reach of genuine end user, any product which becomes unaffordable to the end user shall not sustain its existence so the crash in the market was inevitable, But even in this period there are plenty of genuine buyers if the prices are affordable and without high maintenance charges for the upkeep it is upto the developers to recognise, presently there are lots of projects

Comment by Anonymous – November 24, 2008 at 3:15 pm

being shelved, scaled down and going for a rebiding ( face saving tactics), speculators immediately stated off loading their stocks , few with sustaining power shall hold untill they cannot afford to pay their mortgages any more, companies have already started retrenching, rents in Dubai started droping,bank interest rates have incresed, come March ( end of academic year)2009 we will see an exodus of families saying goodbye to UAE since it is not worth for them to be live here any more, and then the real crash starts…….. Advice time : 1. Do not panic this is not a end of the world 2. If you cash start investing in the shares 3. force banks to reduce the interest rates and extend the

Comment by Lost Bull – November 24, 2008 at 3:31 pm

repayment period. 4.Hunt for good bargains in the real estate property market start buying hagle with the developers,5.

This is good news as there is very sustainable future ahead for those who weathers this strom 6.

Live life comfortably as you will not take anything when you are dead anyway 7.

Pray for a good health during this stressful period ……… May God Bless U.A.E and its Rulers

Comment by Lost Bull – November 24, 2008 at 3:41 pm

Looking for real estate in Dubai? Property Portal connects you to hundreds of sales and investment opportunities

in the world’s hottest real estate market.

Comment by server Baig – November 25, 2008 at 5:29 am

money-grubbing pigs deserve to wallow in their own filth

Comment by rich man poor man – December 1, 2008 at 6:54 am

well dune dubai dream..!!

Comment by ignorent – December 6, 2008 at 4:08 pm

to all Dubai haters i say “moral indignation is jealousy with a halo”……

Comment by Wells.H.G – December 11, 2008 at 1:36 am

i believe that rich man poor man’s comment is logically directed towards the party that created this

worldwide financial crisis, which naturally is not Dubai…..see what i mean !?

Comment by Wells.H.G – December 16, 2008 at 3:01 am

 

Sold short by the developers of Dubai – The National Newspaper – Sent Using Google Toolbar

Sold short by the developers – The National Newspaper

It sounded like the kind of home most people dream about. With a private beach on the doorstep, perfectly landscaped courtyards and a choice of seven gyms, Jumeirah Beach Residences (JBR) was set to become the epitome of lavish beachside living.

Set along the north shore of Dubai Marina, and with the Palm Jumeirah close by, the 36-tower project was going to offer “a year-round beach resort lifestyle” to its anticipated population of 25,000, according to the sales pitch used to attract investors to the Dubai Properties development.

Buyers began moving in to their new homes last year and looked forward to the day when their dream would be made complete with access to their own private beach park and gym complexes. But that day never came. In June, they were horrified to learn that a significant part of that beach would be used as a car park, while only two of the seven community gyms would be built.

“This is a massive part of the lifestyle that was sold to us,” said Wassim Islam, who bought a three-bedroom apartment at JBR. “It’s changed my perception of a development from something that was desirable to something that is just a residential estate. While the value of my property has gone up, I would not be able to afford the lifestyle sold to me now.”

This is just one of countless stories that have prompted a change in the way Dubai’s property market is regulated, aimed at making sure investors get what they paid for.

Residents of JBR can at least take comfort in the fact that their homes were built and are now worth about three times the purchase price.

The same cannot be said for those who have ploughed thousands of dirhams into projects that have either been delayed or cancelled. These people were not necessarily pining for the high life. All they wanted was a home they could afford, and in a location that was likely to increase in value.

In early 2006, Lorenza Gazzola, a Dubai resident, bought an off-the-plan apartment in Dubai Lagoon, a development by Schön Properties, a Pakistani company. Attracted by the project’s location away from the hustle and bustle of central Dubai, and even more so by the price of Dh600 (US$163) per square foot, Ms Gazzola thought it would be the perfect investment. An attractive payment plan also alleviated the need for a mortgage, which few banks were offering at the time.

“When I first saw the Dubai Lagoon project, I was impressed by the number of buildings, the lagoons and the greenery. It felt like a perfect family community, with a friendly and quiet environment,” she said. “It wasn’t marketed as a luxury development, but I was happy that finally someone with a limited income like me could purchase something affordable, and without having to pay high interest rates to the bank.”

Two years on, Ms Gazzola has nothing to show for her investment. After a series of delays over the project’s design, construction finally began at the end of last year. But progress stalled in May, when the contractor ran into difficulties because of the surge in construction costs.

Pressure from angry investors and the Dubai Real Estate Regulatory Authority (Rera) has forced Schön to resume construction on the first two zones of the seven-zone project, while an additional contractor has been appointed to build zones three and six. Another contractor is expected to be appointed for the remaining zones and the project has now been marked for completion in 2011.

“My dream of buying a home has turned into a nightmare,” Ms Gazzola said. “I was looking forward to moving in this year. I have so far spent the majority of my savings on a modest property that hasn’t yet materialised.”

Dubai is not the only emirate to have felt the brunt of property scandals.

Earlier this year Tameer Holding, a company based in Sharjah, decided to put its Dh30 billion AlSalaam City development on hold because of problems with power and water supplies.

Those who had made payments towards their property in the past three years have since been left in limbo while awaiting the development’s fate.

Although Tameer has offered them a refund with interest, or the chance to transfer their investment to another project, many are reluctant to accept.

Martin Nield, an investor from the UK, bought 10 townhouses in the project at Dh600 per sq ft. He has so far paid Dh2 million. “I don’t think it’s acceptable just to be offered your money back. Some people have been making investments for the last three years and have paid around 70 per cent,” he said. “But how long can it continue to be on hold for? The land was graded two years ago, but all that’s been built are eight show houses.”

The common thread between all of these projects is that they were launched between 2004 and 2005, a time when big project announcements were all the rage, but legal protection was limited. Risks were taken on the premise that huge returns on investment could be reaped. For some, the gamble paid off.

“Many have made huge profits on property here,” said Niall O’Toole, a partner at the law firm Clyde & Co. “But others have been naive and haven’t accurately calculated their risk.”

Dubai’s legal structure, although improving, has had to play catch-up with the market. The arrival of Rera last year came as a relief to many. All developers now have to be approved by the authority and have an escrow account, into which all money paid by investors goes and is used solely for the development’s construction.

But while Rera has instilled some confidence in the market, many of the problems faced by investors today stem from projects launched before it was set up, at a time when there was no protection via escrow accounts.

“Contractually, these investors are not without rights, but how effective are they? If the developer is broke and the contractor is broke, what can they do?” said Mr O’Toole.

But better legal remedies are on the way. Foreign investors in Dubai will now be able to take their grievances to the Property Court, which begins this month and is expected to speed up the process of hearings.

“A crucial part of the evolution of Dubai is the appreciation that property and construction breed disputes, and so there must be appropriate ways to resolve or determine those disputes,” said Nick Carnell, a partner at the law firm Kennedys.

“But it’s also fundamental that the court gets off to a good start.

Without an effective means to deal with such disputes, confidence will be eroded very quickly.”

Also in the pipeline is a consumer protection law, which will better protect off-the-plan buyers from misleading marketing by developers and will make it more difficult for developers not to honour their promises.

“These changes, if introduced, will impact how developers market their projects and will hopefully assist in preventing some of the problems that have occurred recently,” said Stephen Kelly, an associate with Clyde & Co.

Still, these changes will go a long way towards avoiding the kind of problems experienced by some investors. Abu Dhabi is still a little behind Dubai in terms of getting its property law in place, although plans are in the pipeline to adopt a similar strategy to Dubai’s. “I believe the Abu Dhabi Government has hired an Australian consulting firm to help devise a Strata Law in Abu Dhabi,” said Mr O’Toole. “There is currently more protection in Dubai than the Abu Dhabi. For example, Dubai has the escrow account in place.”

Mr O’Toole said the best remedy was doing your homework before buying.

“Be careful, do your research and look at the strength of the developers. The big ones have huge asset banks, while the smaller ones are more exposed to risk. Human nature is such that we talk about learning from other people’s mistakes, but we very rarely do. This is a crazy market and I don’t think people will learn their lessons until there are major failures.“

agiuffrida@thenational.ae

Gulfnews: Property Scandal – 3,458 complaints against Dubai ‘developer’ Al Boom

Gulfnews: 3,458 complaints against ‘developer’:

By Bassam Za’za’, Senior ReporterPublished: August 27, 2008, 23:40
Dubai:
A total of 3,458 complaints have been filed against Emirati businessman Abed Al Boom, owner of Abed Al Boom Management and Development Properties, for reportedly swindling depositors of an estimated Dh847 million.

Chief Public Prosecutor Yousuf Foulaz, Head of First Public Prosecution in Deira, announced this yesterday, and said: “The number of complainants might increase.

Until August 20, the Public Prosecution recorded 3,458 complaints from individuals and the total financial claims against Al Boom are around Dh847,266,000. His frozen assets cover about 15 per cent of the total claims.”

Foulaz said Al Boom has been given a cell-phone and access to his lawyers to enable him to recover funds that he claimed he has abroad. Investigation started on July 6.

Al Boom’s case gained public and media interest and was surrounded by different rumours …

Our main legal responsibility is to recover the claimants’ money. Most of the depositors have a limited income,” Foulaz told a media gathering at the Public Prosecution office.

Responding to Gulf News’ question whether media reports and rumours had an influence on the

Al Boom case, he preferred not to comment and replied: “I will remain optimistic. We aim to recover the claimants’ money.”

Dubai’s Attorney General, Eisam Eisa Al Humaidan, ordered the freezing of transactions of shares owned by Al Boom and his associates and the halting of all business transactions concerning their property, assets and bonds.

“The investigation continues and a committee of financial experts from the Rulers Court is currently examining the case,” added Foulaz.

Al Boom’s lawyer, Salim Al Sha’ali earlier told Gulf News: “My client didn’t have any intention of swindling any of the depositors. He has been trying to return the depositors’ money by selling his projects.”

Al Boom and eight alleged associates have been charged with swindling and conning dozens of victims by running a bogus investment portfolio.

$463mn deal to ease Schon Properties Dubai Lagoon delays

$463mn deal to ease Dubai Lagoon delays

Dubai-based developer Schon Properties has signed a $463 million contract with Belhasa Engineering and Contracting Company to speed up the delivery of its delayed Dubai Lagoon development.

Investors in the $816.4 million residential project in Dubai Investment Park have been complaining about delays for months.Earlier this month Schon Properties announced it would be giving full refunds to investors who had purchased units which were scheduled for completion by December 2007.

The statement came a day after Dubai’s real estate agency said the project had not been cancelled.

Schon Properties has blamed the delays on infrastructure alterations and the rising cost of construction costs which has forced the developer to renegotiate its original agreement with Thai contractor, Powerline Gulf.

Belhasa is expected to start on site in October and completion is expected at the end of 2010 or early 2011 said Schon Properties

Sama Dubai – Lagoons CEO Abdul Salam Al Marri faces corruption probe

21 August 2008Dubai:

Abdul Salam Al Marri, chief executive of the Lagoons – a project by Sama Dubai

Sama Dubai, a Dubai Government owned real estate developer, is facing probe, Gulf News has learnt.

“We just came to know that he has come under investigation,” a source close to Sama DubaiSama Dubai, said.

Sama DubaiSama Dubai’s flagship project, the Lagoons – on Dubai Creek has been delayed. The project is expected to house Dubai Towers, Dubai – the four towers at the core of its development.

The news comes amid a government crackdown on bribery and corruption – mostly in the real estate sector.

Police began the probe on three government officials on corruption. Market sources hinted that many more heads are expected to roll.

Dubai government, in a recent statement, has announced zero tolerence against corruption.
“The Government of Dubai will take strict and prompt action against all acts of corruption and bribery wherever they occur in the emirate, whether in the public of private sectors,” Dubai’s Public Prosecutor said in a recent statement.

By Saifur Rahman

Sama Dubai – Lagoons CEO Abdul Salam Al Marri faces corruption probe

21 August 2008Dubai:

Abdul Salam Al Marri, chief executive of the Lagoons – a project by Sama Dubai

Sama Dubai, a Dubai Government owned real estate developer, is facing probe, Gulf News has learnt.

“We just came to know that he has come under investigation,” a source close to Sama DubaiSama Dubai, said.

Sama DubaiSama Dubai’s flagship project, the Lagoons – on Dubai Creek has been delayed. The project is expected to house Dubai Towers, Dubai – the four towers at the core of its development.

The news comes amid a government crackdown on bribery and corruption – mostly in the real estate sector.

Police began the probe on three government officials on corruption. Market sources hinted that many more heads are expected to roll.

Dubai government, in a recent statement, has announced zero tolerence against corruption.
“The Government of Dubai will take strict and prompt action against all acts of corruption and bribery wherever they occur in the emirate, whether in the public of private sectors,” Dubai’s Public Prosecutor said in a recent statement.

By Saifur Rahman

Casa del Mar Dubai Marina Property scandal

Crisis in perspective: RERA

Investors in the Casa del Mar development in Dubai Marina have been told by the new owner, Al Mashraf Bank, that once completed, the project will be sold to new investors, rending the current contracts void.

The original owner of the development, Obaid Bin Jarsh, marketed Casa del Mar through Deyaar. He then sold it to Al Mashraf “due to liquidity problems”, in a letter to investors dated July 11, 2007.

Bin Jarsh had also promised to return 10 per cent of all investments.

However, with one investor paying Dh720 per square foot for six units three years ago, 10 per cent is not an adequate refund.

It is not clear how many investors will be affected by this latest turn of events.

In April this year, the director-general of the Dubai Land Department wrote in a letter to one investor, “Bin Jarsh’s offer to return the original amount is unacceptable.”

The letter also said that Bin Jarsh’s act of selling the project before any settlement had been agreed was a “violation of Dubai property regulations”.

However, despite this letter, nothing has since been done to solve the situation.
“Nobody listens to us investors. If you’re lucky they build it,” said one investor to Gulf News.
As the 30-storey project nears completion, investors are worried that Al Mashraf Bank will sell it on, disregarding previous contracts.

Galal Al Dimeery, real estate manager at Al Mashraf, said once Casa del Mar is complete, it will be launched again under a new name and then sold on to new investors.

Al Dimeery also said that when Al Mashraf bought the project, it was “empty”.

Dubai’s Real Estate Regulatory Authority’s (Rera) plans to create a new property court cannot come quickly enough, as more and more developments lack the transparency and confidence of more mature markets.

Rera is overwhelmed with complaints from investors ranging from issues such as project delays to money disputes.

“Rera is not a court. It’s just a way to regulate the market,” Marwan Bin Galita, chief executive of Rera said.

Both Obaid Bin Jarsh and officials at Deyaar were unavailable for comment.

Dubai Property Prices – the truth – Real Estate – ArabianBusiness.com

Dubai Property Prices – the truth – Real Estate – ArabianBusiness.com:

According to Malcolm Gladwell’s latest book quite often we have discovered the truth of a situation long before we are aware or able to communicate it.

In Blink Gladwell uses a game to demonstrate this. In one example, his test subjects are shown four packs of cards, face down. Two are red and two are blue. Participants must choose the correct combination of cards to make money.

After an average of 50 tries, participants realize that blue cards are the means to greater wealth over time. Red cards are much riskier, and the down side is much bigger than any up.”

The point of the game is not to find out how quickly participants can rationalise the game, but how quickly they subconsciously understand its dynamics.Participants were wired up to see the effect of the game on their heart rates. After ten cards or less, red cards induced palpitations.
Blue cards produced no results at all.In other words the test subjects subconsciously understood the game very quickly, but it took their brain another thirty to forty rounds to be able to explain it – and their actions.George Soros, the $9bn man who made a large chunk of his fortune betting the UK would crash out of the ERM used to suffer back aches – which was his body’s way of telling him he need to change his market holding positions. This is a quote from his son, Robert speaking to Soros’ biographer, Michael Kaufman: “My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is bullshit. I mean, you know the reason he changes his position on the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm, and it’s his early warning system…

“He is… living in a constant state of not exactly denial, but the rationalisation of his emotional state.”Last week I wrote a column on Dubai property prices. It sparked a lot of debate, with many of you giving infinitely superior rationalisations of why I was wrong – and in far fewer cases right – regarding Dubai’s housing market. My argument was simple: a lack of decent places to live and work in a booming Middle East give Dubai scarcity value – and that means there was more room for property prices to rise.Most of you disagreed.What we are all doing is trying to justify a gut reaction as to where we are on the above chart of what a bubble looks like over time. Some of you may argue we are not on it at all.I have borrowed this chart from Soros’ latest book, The New Paradigm of Financial Markets. To fully explain the curve I would need to go into Soros’ philosophy regarding reflexivity – which would be worthwhile, but not within this column.

Instead, I will explain what the stages look like. The graph or market takes off at point 2.
This is when a trend is recognised (house prices are rising), and is reinforced by a bias (the belief that prices are undervalued and will continue to rise). In a bubble this results in valuations considerably higher than ‘equilibrium’ – the normal balance of supply and demand.Normally the checks and balances of a market will mean at some point ‘testing’ will occur (houses on the Palm fell briefly in 2006 as premiums sky rocketed, and the market wobbled in realisation that many units would not be completed for several years – stage 2). In most cases the set back will return a market to equilibrium.

In a bubble, however, the testing is shrugged off and both the trend and the bias continue (3), normal rules of the market are jettisoned and prices take off (4). It’s at this point, investors are said to be irrationally exuberant, and believe things really can be different this time.According to Soros, there is always a moment of truth, however – stage 5 – when “reality can no longer sustain the exaggerated expectations”.

In period 6 people continue to play the game but no longer believe in it.

Point 7 is reached when the trend turns downwards (house prices fall) and the bias inverses (property prices are over valued), leading to a “catastrophic” downward acceleration (8), also known as a crash.

According to this model the boom-bust cycle starts slowly (prices rise gently), accelerate gradually and then fall steeper than they have risen.Given Malcolm Gladwell’s argument that subconsciously we understand a situation before we can provide a full justification of what is happening, I would like to conduct a little experiment.

What I would like to do is use the Internet to draw your collective subconscious together to pinpoint where as a group ArabianBusiness.com readers think we are on this chart.

I will publish the median score, and if enough of you take part, your best arguments to justify each position.Those of you who argue that we are at stage 1 are arguing we are not in a bubble at all, but that prices are rising to a genuine equilibrium.

Those of you who argue we are in stage 2 are arguing prices have only just begun their journey, and the market will at some point test and correct itself.Those of you who say we are on points 3-5 are arguing that we are in a bubble, but we have not reached the peak yet.

Those of you who say we are at poing 6 are arguing we no longer believe in the valuations – and that a crash is imminent.Very few of us are blessed with a back pain that helps us predict the future.

However, what we have that Soros does not is the Internet, and the ability to draw together the gut instincts of thousands. Comment on this article and we will together form an overview of how much leg room property prices have to run. Make sure you detail whether you are talking about Dubai in particular, or the region as a whole.

Comments : http://www.arabianbusiness.com/index.php?option=com_content&view=article&id=527200:dubai-property-prices—the-truth

Deadline set for Ivory Towers explanation – RERA Dubai also warned other developers

Deadline set for Ivory Towers explanation – Real Estate – ArabianBusiness.com: “

Dubai’s real estate regulator (Rera) has given Saudi developer Sokook until next Tuesday to explain why investors in its Ivory Tower project were told to stop payments, leading to the termination of contracts.

Hundreds of investors had purchased off-plan units in the 20-storey residential unit launched in 2005, according to Gulf News.

Last month Sokook promised Rera that construction of Ivory Tower would finally begin on November 1 after a dispute over a bank guarantee with Tecom – master developer of International Media Production Zone (IMPZ) – is resolved.”

Sokook is still cancelling investor contracts, blaming investors for not paying their monthly installments.However, in letters to investors dated on about February 19, Sokook wrote that until construction began, “all payments in the meantime are still postponed”, contradicting itself.Furious investors in the project have now set up an ‘investors group’ which they hope will force

Sokook to reinstate their contracts or refund investments at current market values.There are currently about 30 investors in the group and they have appointed a lawyer.

Investors have said that they want their contracts reinstated or accept refunds on their investments at the current market value.“They are offering 10 per cent at best and our money back. The price for IMPZ per square foot has tripled since we bought into the project,” one investor told the newspaper.

Rera has also warned other master developers and sub developers that it will take action if they fail to fulfill contractual obligations.“

A developer who feels a project has been held up due to delays in the handover of plots by the master developer should contact us,” Marwan bin Ghalita, CEO of Rera, said on Monday.“

We will then mediate between the two parties and come to a solution.

We will talk to the master developer and try to find out why the project has been delayed.

We will certainly take action to regulate the market,” he added.

Rera has sent notices to developers instructing them not to cancel agreements or force investors to accept cancellation terms. “

No developer has yet come back to us informing about any cancellations.”

Worrying signs in realty market – Middle East News – Sent Using Google Toolbar

Worrying signs in realty market – Middle East News

Friday, Jul 25, 2008

Gulf News

Dubai: Real estate speculators need to be rooted out of Dubai’s housing market, and introducing a 50 per cent capital gains tax on properties bought and sold within a period of 12 months could be the best way to discourage short-term speculators, Standard Chartered Bank said yesterday.

Curbs against speculators will reduce house prices and improve the stability of the market, the bank noted in a research paper.

“It is a hot topic and having a huge impact on the economy. We need to get speculators out of the market,” said Marios Mara-theftis, the bank’s regional head of research for Middle East, North Africa and Pakistan.

He said there are “worrying signs” of speculative activity in Dubai’s real estate market, which is “destabilising, dangerous and unsustainable.” He said speculation in Dubai has reached “excessive levels.”

The introduction of a capital gains tax would encourage long-term investors and end-users to buy property, he said.

The bank’s report said that due to the increasing population, 44,000 housing units have to be released on to the market each year in order to keep up with demand.

The report also shows there is a premium of Dh1,950 per square foot for villas and for apartments, the price increases around Dh70 per square foot the higher the floor.

There are also significant premiums for the Palm Jumeirah at Dh1,110 per square foot and Burj Dubai at Dh3,965.

Standard Chartered had forecast back in March that there would be a 15 per cent premium in 2008 in the housing market.

“Well, it wasn’t 15 per cent in one year, it was 42 per cent in three months,” Maratheftis said. He said it is the short-term investors, looking to make money, who are hurting the market.

© Gulf News 2008. All rights reserved.

Worrying signs in realty market – Middle East News – Sent Using Google Toolbar

Worrying signs in realty market – Middle East News

Friday, Jul 25, 2008

Gulf News

Dubai: Real estate speculators need to be rooted out of Dubai’s housing market, and introducing a 50 per cent capital gains tax on properties bought and sold within a period of 12 months could be the best way to discourage short-term speculators, Standard Chartered Bank said yesterday.

Curbs against speculators will reduce house prices and improve the stability of the market, the bank noted in a research paper.

“It is a hot topic and having a huge impact on the economy. We need to get speculators out of the market,” said Marios Mara-theftis, the bank’s regional head of research for Middle East, North Africa and Pakistan.

He said there are “worrying signs” of speculative activity in Dubai’s real estate market, which is “destabilising, dangerous and unsustainable.” He said speculation in Dubai has reached “excessive levels.”

The introduction of a capital gains tax would encourage long-term investors and end-users to buy property, he said.

The bank’s report said that due to the increasing population, 44,000 housing units have to be released on to the market each year in order to keep up with demand.

The report also shows there is a premium of Dh1,950 per square foot for villas and for apartments, the price increases around Dh70 per square foot the higher the floor.

There are also significant premiums for the Palm Jumeirah at Dh1,110 per square foot and Burj Dubai at Dh3,965.

Standard Chartered had forecast back in March that there would be a 15 per cent premium in 2008 in the housing market.

“Well, it wasn’t 15 per cent in one year, it was 42 per cent in three months,” Maratheftis said. He said it is the short-term investors, looking to make money, who are hurting the market.

© Gulf News 2008. All rights reserved.

Peter Riddoch, CEO Damac Properties, Pt 3/3 | Face to Face

Peter Riddoch, CEO Damac Properties, Pt 3/3 Face to Face

In the final part of our interview with Peter Riddoch, CEO Damac Properties, he discusses why so many real estate developments miss their deadlines, whether the Dubai property boom is a bubble waiting to burst and how the market has changed over the past few years.”

Peter Riddoch, CEO Damac Properties, Pt 2/3 | Face to Face

Link Video Interview :http://www.ameinfo.com/161216.html
Peter Riddoch, CEO Damac Properties

In the interview with Peter Riddoch, CEO Damac Properties, we look at its recent controversy surrounding Palm Springs on Jebel Ali and how this has affected the company’s reputation, and discuss other on-going projects in Dubai

7DAYS General and Local News | Dubai Abu Dhabi | UAE | Property market ‘balanced by 2010’

7DAYS General and Local News Dubai Abu Dhabi UAE Property market ‘balanced by 2010’:

“The booming property markets in Dubai and the Northern Emirates are expected to achieve a more sustainable balance between investors and property owners by 2010, a developer said yesterday. “The construction boom in buildings is about to peak in 2009, with three billion dollars’ worth of real estate either on the drawing board or under construction,” said said Mohammed Nimer, chief executive officer of MAG Group Property Development.

“From there, the value of the market will fall back to 2007 levels of around one billion dollars as more units are delivered. That will hopefully subdue rising market prices.”
Nimer said actual homeowners currently account for just 30 per cent of the properties sold at launch, as real estate sales are still being dominated by short-term investors and not end-users. The result is inflated prices, since units are sold-on with a premium numerous times prior to completion. Nimer pointed to the database held by research firm Proleads, which shows a “dramatic decline in announced new or planned construction” of residential blocks budgeted at up to $100 million next year and in 2010 as dozens of projects reach completion.
“Most projects are still under construction and the next wave of supply will be coming in 2009-2010, which may help bring some stability to the market,” Nimer said. “However, this may not provide major relief from rising prices as much of the problem is also due to the ever-increasing costs of land, labour and materials – something not likely to change in the short term.””

7DAYS General and Local News | Dubai Abu Dhabi | UAE | Property market ‘balanced by 2010’

7DAYS General and Local News Dubai Abu Dhabi UAE Property market ‘balanced by 2010’:

“The booming property markets in Dubai and the Northern Emirates are expected to achieve a more sustainable balance between investors and property owners by 2010, a developer said yesterday. “The construction boom in buildings is about to peak in 2009, with three billion dollars’ worth of real estate either on the drawing board or under construction,” said said Mohammed Nimer, chief executive officer of MAG Group Property Development.

“From there, the value of the market will fall back to 2007 levels of around one billion dollars as more units are delivered. That will hopefully subdue rising market prices.”
Nimer said actual homeowners currently account for just 30 per cent of the properties sold at launch, as real estate sales are still being dominated by short-term investors and not end-users. The result is inflated prices, since units are sold-on with a premium numerous times prior to completion. Nimer pointed to the database held by research firm Proleads, which shows a “dramatic decline in announced new or planned construction” of residential blocks budgeted at up to $100 million next year and in 2010 as dozens of projects reach completion.
“Most projects are still under construction and the next wave of supply will be coming in 2009-2010, which may help bring some stability to the market,” Nimer said. “However, this may not provide major relief from rising prices as much of the problem is also due to the ever-increasing costs of land, labour and materials – something not likely to change in the short term.””

Property Scandal UAE Al Salam City – Stressed Investors of AL SALAM CITY setup Website

AL SALAM CITY – The developer of Al Salam City have put the project on hold. This happened in March 2008 but was not communicated to the buyers

Wecome to http://www.alsalamcity.biz/ this site has been created by a group of extremely unhappy investors and is for anyone who has purchased a property in Al Salam City and is wondering what happens next.

The developer of Al Salam City have put the project “on hold”. This happened in March 2008 but was not communicated to the buyers, it was only the people who contacted Tameer who were told of the options. Now as time is ticking by, we need to know what exactly is happening to our investments.

We are looking for people to unite as one big entity to make our opinions and losses understood and compensated.

Please feel free to register as a user and use the blog site, its totally free and we are looking for like minded people who have suffered.

The blog site is an excellent medium for any news, sharing stories and also for us to agree on what our action plan will be.

Who am I? Well I am an investor in Al Salam City who has come to the end of a very long road of bad customer service. Someone who has been ignored, not called back, not replied to and basically lied to throughout the whole process. I feel the need to take action, for myself and my family. What has happened is not acceptable and now is the time to do something about it.

If you would like to contact me or my team click the ‘contact us’ link

Property Scandal UAE Al Salam City – Stressed Investors of AL SALAM CITY setup Website

AL SALAM CITY – The developer of Al Salam City have put the project on hold. This happened in March 2008 but was not communicated to the buyers

Wecome to http://www.alsalamcity.biz/ this site has been created by a group of extremely unhappy investors and is for anyone who has purchased a property in Al Salam City and is wondering what happens next.

The developer of Al Salam City have put the project “on hold”. This happened in March 2008 but was not communicated to the buyers, it was only the people who contacted Tameer who were told of the options. Now as time is ticking by, we need to know what exactly is happening to our investments.

We are looking for people to unite as one big entity to make our opinions and losses understood and compensated.

Please feel free to register as a user and use the blog site, its totally free and we are looking for like minded people who have suffered.

The blog site is an excellent medium for any news, sharing stories and also for us to agree on what our action plan will be.

Who am I? Well I am an investor in Al Salam City who has come to the end of a very long road of bad customer service. Someone who has been ignored, not called back, not replied to and basically lied to throughout the whole process. I feel the need to take action, for myself and my family. What has happened is not acceptable and now is the time to do something about it.

If you would like to contact me or my team click the ‘contact us’ link

Gulfnews: Ajman cancels PKN Princess Resort project

Gulfnews: Ajman cancels PKN Princess Resort project

original published Gulfnews

By Bassma Al Jandaly Staff Reporter Published: June 22, 2008, 23:54

Dubai: The Ajman Government has cancelled the Dh2.3 billion PKN Princess Resort project and on Sunday urged investors to make their claims directly to the developer. According to an official statement from the Ajman Government those who have purchased properties must make their claims before noon on June 30. The project’s trade licence, commercial registration and membership with Ajman Chamber of Commerce and Industry have been cancelled. The statement said that PKN will be solely liable for any claims from property buyers. According to the statement from the Ajman government, the project located in Al Manama area was cancelled on June 15. The Government of Ajman and PKN Procurement jointly decided to end their relationship in the project.

A reality check for realty boom – Sent Using Google Toolbar

A reality check for realty boom

original By Saifur RahmanBusiness Editor Gulfnews Published: June 20, 2008, 00:08

Dubai: Lack of coordination between government bodies could threaten the growth of the real estate sector in the Northern Emirates, industry officials cautioned on Thursday. More than 300 towers are in various stages of development on both sides of the Emirates Road in Ajman, Umm Al Quwain and Ras Al Khaimah that might be completed but will not see “light” years after completion. Some billions of dirhams have been committed by small investors that could go wrong if government authorities do not collaborate to ensure utilities, officials say. A senior federal government official has accused local governments in the Northern Emirates of “unplanned” developments that could lead to a major crisis relating to power and water supplies, or lack of it. “The abrupt development in the construction field now seen in Northern Emirates is unplanned,” Hassan Abdullah Al Ghasyah, executive director of Supply at the Federal Electricity and Water Authority (Fewa), said in a statement, responding to queries from Gulf News. “Local government authorities have not coordinated on precise water and power requirement with Fewa. However, according to the Cabinet decision, Fewa is committed to a minimum 8 per cent annual growth in power and water demand.” Private sector officials estimate the GDP growth of emirates such as Ajman at 27 per cent and population growth at 18 per cent. Real estate investors who are lining up to buy freehold homes in Ajman might have to wait for an indefinitie period for utilities, industry sources said. Saleh Amer Al Katheeri, chairman of High Sky Properties, which launched Triple Towers hosting 1,160 apartments in Ajman, told Gulf News: “Yes, electricity and water supply remain a concern for us. We have been assured by the government of a steady supply. But if there’s a shortage, we will use our own generator to power these buildings.” Issues related to utilities have forced the construction of Al Salam City – valued at Dh30 billion – to be postponed. Umm Al Quwain last month accused developers Tameer Holding for ignoring the issue, which has largely been under government control. Fewa is meeting the current demand by operating its own plants and importing water and power from Abu Dhabi Electricity and Water Authority, Al Ghasyah said. “In the future, the plan is to increase this import,” he said. Despite rising concerns, small-time investors are scrambling for apartments in new “freehold” areas in the Northern Emirates to make a quick profit. Property prices have also been rising fast due to strong demand. Apartment prices in Ajman have jumped to Dh500 per square foot, up from Dh400 in a matter of months, sources said. Power supply: New plants to be built Shaikh Abdul Aziz Bin Humaid Bin Rashid Al Nuaimi, chairman of Ajman Planning and Property Department, has openly expressed concern about the city. “I believe infrastructure development in Ajman is not coping with the rapid developments in real estate … this could cause problems,” he said. “The sewage project is delaying the infrastructure development, though we are pushing for its completion to go ahead with the infrastructure development. The Ministry of Energy will also build a new electricity and water plant.” - By Bassma Al Jandaly/, Staff Reporter Would you buy property to live or as an investment? Would higher returns on investment encourage you to buy property despite a lack of infrastructure?

A reality check for realty boom – Sent Using Google Toolbar

A reality check for realty boom

original By Saifur RahmanBusiness Editor Gulfnews Published: June 20, 2008, 00:08

Dubai: Lack of coordination between government bodies could threaten the growth of the real estate sector in the Northern Emirates, industry officials cautioned on Thursday. More than 300 towers are in various stages of development on both sides of the Emirates Road in Ajman, Umm Al Quwain and Ras Al Khaimah that might be completed but will not see “light” years after completion. Some billions of dirhams have been committed by small investors that could go wrong if government authorities do not collaborate to ensure utilities, officials say. A senior federal government official has accused local governments in the Northern Emirates of “unplanned” developments that could lead to a major crisis relating to power and water supplies, or lack of it. “The abrupt development in the construction field now seen in Northern Emirates is unplanned,” Hassan Abdullah Al Ghasyah, executive director of Supply at the Federal Electricity and Water Authority (Fewa), said in a statement, responding to queries from Gulf News. “Local government authorities have not coordinated on precise water and power requirement with Fewa. However, according to the Cabinet decision, Fewa is committed to a minimum 8 per cent annual growth in power and water demand.” Private sector officials estimate the GDP growth of emirates such as Ajman at 27 per cent and population growth at 18 per cent. Real estate investors who are lining up to buy freehold homes in Ajman might have to wait for an indefinitie period for utilities, industry sources said. Saleh Amer Al Katheeri, chairman of High Sky Properties, which launched Triple Towers hosting 1,160 apartments in Ajman, told Gulf News: “Yes, electricity and water supply remain a concern for us. We have been assured by the government of a steady supply. But if there’s a shortage, we will use our own generator to power these buildings.” Issues related to utilities have forced the construction of Al Salam City – valued at Dh30 billion – to be postponed. Umm Al Quwain last month accused developers Tameer Holding for ignoring the issue, which has largely been under government control. Fewa is meeting the current demand by operating its own plants and importing water and power from Abu Dhabi Electricity and Water Authority, Al Ghasyah said. “In the future, the plan is to increase this import,” he said. Despite rising concerns, small-time investors are scrambling for apartments in new “freehold” areas in the Northern Emirates to make a quick profit. Property prices have also been rising fast due to strong demand. Apartment prices in Ajman have jumped to Dh500 per square foot, up from Dh400 in a matter of months, sources said. Power supply: New plants to be built Shaikh Abdul Aziz Bin Humaid Bin Rashid Al Nuaimi, chairman of Ajman Planning and Property Department, has openly expressed concern about the city. “I believe infrastructure development in Ajman is not coping with the rapid developments in real estate … this could cause problems,” he said. “The sewage project is delaying the infrastructure development, though we are pushing for its completion to go ahead with the infrastructure development. The Ministry of Energy will also build a new electricity and water plant.” - By Bassma Al Jandaly/, Staff Reporter Would you buy property to live or as an investment? Would higher returns on investment encourage you to buy property despite a lack of infrastructure?

Dubai – A new court set up to deal with property cases

original published EmiratesBusiness 24-7
By Muna Ahmad on Thursday, May 29, 2008

http://www.business24-7.ae/Articles/2008/5/Pages/05292008_4329042711af419fa7130f59c7886811.aspx

By
Muna Ahmad on Thursday, May 29, 2008 will sit for the first time next Monday, a senior official has revealed.

The Property Court will operate under new regulations that differ from those that apply to the existing civil courts, Ahmad bin Hazim, Director-General of Dubai Courts, told Emirates Business.

The court has been established in response to the rapid growth and development that Dubai is experiencing.
It will handle all types of property cases and is one of six specialist courts being set up following an order earlier this month by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

Once the court starts functioning it will develop in stages,” said Bin Hazim.

It will start with all the traditional property cases, which are currently being handled by Dubai Courts.

The court president is going to define new procedures and laws that relate to property cases.

Two sets of laws will be followed.
The first, the Substantive Laws, regulate the sector and are defined by the Land Department. The second, the Procedures Laws, will be drawn up by the court. For example, currently the time between hearings is about one month.

We are going to reduce this gap to about a week.

The Property Court will have its own premises and budget. We have three possible locations but the final site has not yet been decided.

Dubai – A new court set up to deal with property cases

original published EmiratesBusiness 24-7
By Muna Ahmad on Thursday, May 29, 2008

http://www.business24-7.ae/Articles/2008/5/Pages/05292008_4329042711af419fa7130f59c7886811.aspx

By
Muna Ahmad on Thursday, May 29, 2008 will sit for the first time next Monday, a senior official has revealed.

The Property Court will operate under new regulations that differ from those that apply to the existing civil courts, Ahmad bin Hazim, Director-General of Dubai Courts, told Emirates Business.

The court has been established in response to the rapid growth and development that Dubai is experiencing.
It will handle all types of property cases and is one of six specialist courts being set up following an order earlier this month by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

Once the court starts functioning it will develop in stages,” said Bin Hazim.

It will start with all the traditional property cases, which are currently being handled by Dubai Courts.

The court president is going to define new procedures and laws that relate to property cases.

Two sets of laws will be followed.
The first, the Substantive Laws, regulate the sector and are defined by the Land Department. The second, the Procedures Laws, will be drawn up by the court. For example, currently the time between hearings is about one month.

We are going to reduce this gap to about a week.

The Property Court will have its own premises and budget. We have three possible locations but the final site has not yet been decided.

Complaint to RERA Dubai – The untouchable Developer in Dubai – Nakheel – DMCC – Al Fajer Properties Plot H3 JLT Dubai

You believe to be on the secure side buying property from hight reputated Developer in Dubai, you believe RERA will help you if you have problems with your developer?

DO NOT MAKE THE MISTAKE LIKE US

Marwan Bin Galita, chief executive of Dubai’s Real Estate Regulatory Authority (Rera), said : “Miscommunication and lack of transparency are the major concerns among real estate investors in Dubai!

He added: What is abnormal is to ask a question and never get an answer. This is what annoys investors.

In 2005 we bought an apartment directly from Nakheel. The Tower was named Falcon Tower located on Plot H3 , Jumeirah Lake Towers.

It was promised us by Nakheel to give us the contract 14 days after paying the deposit. We paid the deposit, we didn´t get the contract. We paid the further installemts until June 2006 ( 45 % of total 775.00 Dhs). We wrote letters to Nakheel, no response no contract until June 2006.
August 2006 we and all other investors of this Tower H3 Jumeirah Lake Towers got a letter from DMCC ( 100 % government) that Nakheel has cancel Falcon Tower in it`s current form.
This letter all invetsors get original here:

http://www.skyscrapercity.com/showthread.php?p=24332666

We ask Nakheel for the reason , we got the answer::It was just a decission of Nakheel Mangement.

DMCC told and confirmed us in November 2006, that they found a new developer for Falcon Tower Plot H3 Jumeirah Lake Towers.
This developer will built the Tower in the current form under the same condition we once agreed with Nakheel,100 % Residential , nothing will change, only the completion will be 6 month later in December 2008.

So we agreed to be tranfered,under the same conditions agreed with Nakheel to get our apartment in a 100 % residetial tower with no changes in the condition and options agreed with Nakheel. DMCC wrote that the contract will be given upon this agreement by the new developer.

The new developer was Al Fajer Properties ( ownded by Hasher Al Maktoum).

Since November 2006 Al Fajer Properties gave us the illusion everything is going smooth.

We ask again and again for the contract, meanwhile with our lawyer.

We wrote endless letters since that time to Al Fajer Properties.

In November 2007 we ask for a meeting together with our lawyer.

Here the CEO AFP, Dr. Shahram Zadeh told us, it will be better for to give up, because Al Fajer will now built only a commercial tower on Plot H3.
Falcon Tower Plot H3 will now be named Jumeirah Business Centre 8.

The general message given by CEO AFP Dr. Shahram Zadeh was:
Give up, this will be the best for you. He offered a compensation of 80.000 Dhs,that´s it, he said, what we consider is a bad joke.

If we wish to proceed, he will give the tower only 1 or 2 floor residential,the rest will be offices.
He called this 99% commercial and 1 % residential construct a MixedUse Building. with the advice that this will be the worst situation we can have, to live in a building which is going 99 % commercial.

For this option he gave us a draft of a contract,without any drawings of the unit and building, without any specifications.

The contract was to this peppered with unfair conditions, a contract which was absolute not signable.

Januar 2008 Al Fajer Properties pushed us to sign this unsignable contract by saying:

Deadline to decide 1 week and if you don`t agree we Al Fajer Properties will chancel every right and refund only the paid monies ,without any compensation.

We didn`t agree to this, we didn`t sign this unsignable document and the case was given from us to RERA March, 5th. 2008.

After our complaint reached RERA Dubai Al Fajer Properties started on March 10th, 2008 to write us absolute aggressive letters from Denton Wilde Sapte, lawyers of Al Fajer Properties.

Our lawyer answered them and told Al Fajer Properties that the dispute is laying in the hands of RERA.

Al Fajer Properties ignored this statement and advice.

Their answer was, simply sending a cheque with the sum of refund ( total the 45 % installemnet we already paid) via courier to our lawyer.
This cheque was not taken and accepted from our lawyer and returned to Al Fajer Properties.

After they got the cheque back, that take this as reason to write a letter to not accept our lawyer longer.

Since that time we didn`t hear again from Al Fajer Properties.

Instead of staying to 100 % agreement we have with DMCC, Al Fajer Properties tried to kick us out with illegal methodes. They breached the given word to us and to DMCC.

Our unit today, if residential as once agreed, is worth 2 Mio. AED.
We are from Europe and at the time we bought and paid our 45 % an had convert Euro in AED,the currency convertion at this time for the named 45 % ( of total 775.000) was 74.000 Euro.

The offered refund of Al Fajer Properties is 345.000 Dhs our payment we already paid to Nakheel ( 45 % of 775.000 ), which is today 60.000 Euro.

3 years without interest, 14.000 Euro currency loss, no apartment plus additional cost for our lawyer etc.

Al Fajer Properties is causing us by breaching the agreement a damage of around over 1 Million AED.

Each point of the statement in this report can be witness by original documents

*) all documents are seen by dubai7stars and available via the author of this story

If you wish any further information about the actual status of this case, please do not hesitate to contact us via the comment. If you wish that the comment should not be publish, please give a short advice in your message

DUBAI – Delays hit building projects – Only one in five construction projects is likely to finish on time

original published The National

Last Updated: May 24. 2008 10:51PM UAE / May 24. 2008 6:51PM GMT

DUBAI // Only one in five construction projects is likely to finish on time, as shortages of materials and skilled workers – and an overabundance of red tape – take their toll.

Industry experts said few of the 4,000 or so projects currently under way would be handed over to clients on the scheduled date. The emirate is currently undergoing a construction frenzy and as the pace of building quickens, so do the risks of delays.

Residential and commercial developments along with road, bridge and utilities projects are all competing for the same resources, compounding the problem.

The same issues could crop up in Abu Dhabi and the northern emirates of Ras al Khaimah and Ajman, as they launch their own large-scale development plans.

The problem is also beginning to manifest in other Gulf states.Qatar, for example, has had to introduce price escalation clauses into contracts to stem the impact of higher building materials prices.

As a result of the delays, the relationship between builders and clients is starting to sour.

In Dubai, only a handful of projects are being completed to the satisfaction of all parties involved, said Kez Taylor, the managing director of Alec, a local building firm.“Only one in five are being completed on time,” said Mr Taylor. We should be hitting the success factor at a much greater rate than we currently are.”

He said the tensions which this led to had threatened to ripple into delays on other projects.
Successful projects … are not the norm in this part of the world.

From this, a blame culture develops, relationships break down, people become despondent and don’t want to do repeat business.”

A major factor in delays and its impact on the relationship between builders and developers was the reluctance of clients to make difficult decisions quickly, Mr Taylor said.
Because of bureaucracy, nobody wants to stick their head out and make a decision, he said.

But it is vital that the client takes the lead – it’s their project.

Emil Rademeyer of Proleads, a research firm, said more than 90 per cent of projects in Dubai were on average two months late.

I don’t think I’ve ever heard of a project being handed over early – that’s probably the question … and I’m pretty certain the response would be very few.

Mr Rademeyer said that late changes in design were a common problem among projects in the region, which led to a complete project overhaul in some cases. The situation was also compounded by a severe shortage in good quality contractors, which impacted on the standard of construction.

While there are the challenges of materials and resources shortages, much of the problem lies with changes to design – I’ve heard of cases when a project has almost been completed but then the owner decides they don’t like it and so they start over,” he said.

And because of the shortage of materials and contractors, clients are sometimes just taking what’s available, which might not be the best quality and is a big threat to the final product.”Developments in Dubai also face severe delays in connecting power, water supplies and telecommunications, with many forced to rely on temporary backups.“

There are internal risks when dealing with partners, but there are also external risks that affect a project,” said Ali Hamdan, the corporate finance manager at Sama Dubai, the developer behind The Lagoons project.

“When it comes to a large-scale project such as The Lagoons, success is dependent on dealing with organisations like the RTA (Roads and Transport Authority), Dewa (Dubai Electricity and Water Authority) and Etisalat – if you don’t connect with the infrastructure on time, you get delayed.

Jubeir Shamte, the executive director of the commercial and contracts department at Dubai Properties, which is developing Business Bay, said that clashes in culture and business practices between foreign and local firms also caused problems.

A lot of foreign companies do not understand the culture here, and when you try and bring in culture from other places such as the UK or America, a lot of problems come with it,” he said.“

For example, the concept of partnering is being treated as a new phenomenon, when it is something that we’ve been doing here for many years.”

agiuffrida@thenational.ae

German Dubai Property Investment Disaster

German Version original published manager-magazin.de

A Financial Fraud ? – Who or What is LOSNA ?

A dream hotel in Dubai and high returns for investors – what a fund initiator from Germany once promised seems now to be a financial fraud.

The Initiator of this fraud could be an unknown investor from a caribean off shore company named “LOSNA”

It is a closed-end real estate fund, which funds promised develop the largest four-star hotel in the Arab world ,operated by the Maritime Group.

The fund initiator of the Dubai 1000 Investment Fund,Mr. Recker from Germany Hamm in Westphalia, promised investors a profit 9 to 12 percent per year .

Above all, however, it exist a mysterious Off-shore company in the Caribbean,called LOSNA, which paid suspect 107 million euros – money, but so far it seems hardly anyone of this company got to face.

Months before Manager-Magazin.de ( Germany) reported that in the Dubai Desert may be a new investor disaster .

The object of the Hotel Fund “Dubai 1000″, a luxury hotel, equipped with 1,000 rooms and 50 suites would have already opened in July 2007.

In fact, but on the alleged plot to that date only a huge construction pit, surrounded by several hundred-meter-long fence.

Even if under high pressure would continue, experts had estimated, was an opening of the Nobel hostel sooner than two years later to be expected.

What little remained even then, nor now appears unlikely.

And that is not only that the construction since the autumn of 2007 barely discernible progress has been made.

The investigation now is about suspect money laundering , suspect advertisement from a bank,” said the German Public procecuter Ina Holznagel. “The suspect in the specific case has now disbanded.” According Holznagel the investigation now is whether the money of investors generally in accordance with its purpose is used, whether in Dubai actually a hotel is built. Investment volume of the “Dubai 1000 Fund” is around 145 MillionEURO.

At least half of the invest hold the initiatior Recker as equity investors in place

According to manager-magazin.de only 1000 investors hold shares in volume of around 24.8million euro.

read more:

http://www.manager-magazin.de/geld/geldanlage/0,2828,547468,00.html

http://www.manager-magazin.de/geld/geldanlage/0,2828,547468-2,00.html

http://www.manager-magazin.de/geld/geldanlage/0,2828,547468-3,00.html

Damac Haz Tower scandal – Business Bay Dubai

investors are losing confidence in the Land Department ….. ……..as they have now had the complaint for over six months

original published GulfNews May 16, 2008, 00:38 By Suzanne FentonS, taff Reporter Published: May 16, 2008, 00:38

Dubai: Confusion over the Haz Tower project in Business Bay may be nearing an end as both Damac and Hilal Al Zarooni will have to sign an agreement by next week, according to Land Department officials. Emad Eldin Farouq, legal counsel for Dubai Land department, said, “There is a settlement agreement that both parties have to sign. They have no choice.” The signing has so far been delayed due to a possible second option. The Haz towers project was launched July 8, 2007, after Damac bought it from Dubai Properties before selling it on to Hilal Al Zarooni. The cause for the delay is unclear but Eldin Farouq says it is due to the reservation agreement. “Damac blames Zarooni for breaking the reservation agreement. Zarooni was meant to sell the building after approval.” <!– document.write(”); //–> However, Damac had received no authority for the floor plans or marketing of Haz Tower, according to official documents received by Gulf News. “Damac didn’t have approval from Zoning Authority for the floor plan and elevations for Plot BB.B.01.040 [Haz tower plot]. “Damac has not taken any approval for marketing any tower on the above plot. Damac, owner of plot BB.B.01.040, has not got any approval to start selling the tower or units in the plot which need bank guarantee first to be provided to Dubai Properties.” Last week, a Damac employee said that the Haz towers project is “on hold, according to a statement by the chairman”. However, Niall McLoughlin, senior vice-president of corporate communications at Damac, denied this. “Haz towers is going ahead. It would be inappropriate for me to further comment on Haz towers. As you know, it is sub-judice,” McLoughlin said in an email to Gulf News. Another Damac employee said any queries should be directed to Hilal Al Zarooni. Investors are becoming increasingly frustrated as there appears to be no reason why the project shouldn’t go ahead. Hilal Al Zarooni told Gulf News, “We’re waiting for the Land department to give their answer. They said it would be next week.” However, investors are losing confidence in the Land Department as they have now had the complaint for over six months. Eldin Farouq said yesterday that “the chapter will be closed next week.”

Damac Palm Spring Scandal – Investors are still uniformed about Details

May, 12. 2008

Damac recently wrote to investors to confirm the construction of Palm Springs on the new plot allocated by Nakheel. Without doubt, RERA has rightfully flexed its muscles to ensure that the Palm Springs development has become re-instated. The Palm Springs Group sees the re-instatement as an opportunity for all involved to promote a healthy, transparent, and collaborative environment in the Dubai real estate industry.

“We are delighted that RERA, Nakheel, and Damac are now unanimous in their support of the development and we look forward to working collaboratively with Damac in the successful execution of the project.”

Furthermore, the letter to Damac has asked for details of the re-instated project, including apartment plans and construction timelines, as well as monthly updates through to project completion.

It is heartening to hear the CEO of RERA, Marwan bin Ghalita recently state that “we cannot let people promise and not deliver in Dubai” – this sends out the right signal to investors and developers alike and bodes well for the continued the growth of Dubai real estate industry.

Damac have finally sent written confirmation of the re-instatement of Palm Springs to investors. Whilst the Palm Springs Group is pleased with this development, the communication merely rubber stamps what has already been issued to the press.

The main concern now for investors is that Damac confirm in writing details of the project, such as the plan specification, build quality, start and handover dates, and whether it is in keeping with the original contract.

April 14, 2008
One investor commented, “we will be writing to Nakheel and Damac requesting them to disclose the new plot handover date and details of any planned changes as a matter of urgency” She went on to say that the Group intend to monitor developments to ensure that any changes are compliant with the contract provisions. It is possible that investors may request a meeting with Damac to get clarification of the details and to iron out any concerns.

Barring any nasty surprises contained in the ‘detail’ of the re-location of Palm Springs, it would seem that both investors and Damac will soon be able put their differences behind them and look forward to the dream that was, and hopefully is, Palm Springs. Let’s hope Nakheels’s and RERA’s role in helping to resolve the crisis serves to strengthen the reputation of Dubai real estate.

Dubai property market beset by fraud claims

Malaysia Sun

Claims of scams, fraud, and embezzlement are hitting the real estate market in Dubai.

The multi-billion dollar construction craze which has attracted investors from all over the world, has seemingly brought in unsavoury types who have been preying on the never-ending appetites of locals and foreigners lining up to invest in the market.A UK company which claimed to have acquired a 900-apartment plot in the proposed Jumeriah Village project, has reportedly sold off apartments in the plot, with no prospect of them ever being built.
The company, Strategic Property Investment, and its associates, William Cowe and Mark Emlick, are being investigated by Dubai and UK authorities.

Dubai authorities are also investigating the mysterious Al Areifi Tower being constructed at Dubai Marina. As we reported several weeks ago, Khalid Saud Al-Areifi & Partner Co., of Riyadh Saudi Arabia, sold several hundred apartments in the project off-the-plan some years ago, taking full payment upfront.In recent weeks the owners of the apartments have been receiving telephone calls and faxes from Al Areifi representatives in Saudi Arabia advising them construction on the project had stopped and would not be resumed.

Investors say they have been offered their original cost, plus interest, back. We have sighted one of the letters sent which verifies the investors’ claims.When we visited the site two weeks ago we found construction in full swing. We contacted the builder on site who confirmed there had been no disruption to the construction and it was proceeding at ‘full steam.’Reports are now circulating that Al Areifi sold the site to the newly-formed, Abu Dhabi-based, Eskan Properties.

A report in Gulf News , however quotes a company spokesman as saying, ‘We sold the tower on again a week back.’
Having bought their apartments and paid for them in full, well before construction started, investors are now wondering how ‘their’ apartments could be on-sold, on two separate occasions since.

Several calls to Emaar Properties, the master developer of Dubai Marina, where the project is sited, have not been returned.

Meantime the investigation into the conduct of the former CEO of Dubai’s second largest property developer, Deyaar, has been widened.
According to Dubai’s Attorney General, Essam al-Humaidan, a second person, Ganesan Krishna Kumar, 49, has been arrested in connection with the investigation. Kumar, originally from India, was a co-founder, and is managing director, of the Dubai-based advertizing agency, Masterbrand (ME) Ltd.,Two other men have also been detained and questioned, but have since been released. Zack Shahin, Deyaar’s ex-CEO is being probed in relation to claims of possible embezzlement. Deyaar has more than 1,600 apartments, as well as retail, and office complexes, under construction in Dubai.

The glitz and glamour of Dubai’s red-hot property market must be feeling the heat of the latest troubles, coming on top of the debacle surrounding the Damac project on the Palm Jebel Ali.
Damac, which claims to be the largest private property developer in the Middle East, sold apartments off-the-plan in what it called the Palm Springs project, a luxury apartments and resort project on the Palm at Jebel Ali.

Four years after launching the project, Damac wrote to investors saying it had been abandoned as the master developer of the Palm had changed the plans and the project could not now fit the site.Within days the master developer, Nakheel, announced it was unaware of Damac’s claims, and that the changes which Damac referred to had been made ten months earlier, and Damac was happy with them.

A hastily convened meeting by the authorities, involving Damac and Nakheel, resolved the matter, with Damac agreeing to proceed with the project. That action averted a class-action lawsuit against Damac by at least sixty angry investors, most of whom were from the UK

Comments

Comments on this story

By adel, 04-26-08, 02:31 AM
An advice on Duabai real estate marketI want to give a little advice to prospective investors in Dubai. Ignore those fantastic property offerings, with incredibly low prices and very long-term and low-cost finance. Believe me guys, the price of cunstruction material and labour, rents, oil…etc have made such projects unviable. Such projects are not economically viable anymore and the little investor will, at the end, lose his or her investment. Watch out !

By Anonymous, 04-24-08, 10:03 PM

Dubai property market beset by fraud claimsI have an apartment in this project which I bought off the plan and paid for in full. As far as I am concerned I am the owner and here I read my apartment has been sold to somebody else, twice! What is going on here? And what about the mighty Emaar. They are overall responsible. Surely they can’t sell these plots off to fraudsters like this and not even answer the phone???? Investors like me just sit out here and get these scraps of information from the news media (thanks! I’m not having a go at you, without you I wouldn’t even know I was being pick-pocketed). Where are the authorities? They shouldn’t just be investigating Deyaar they should be investigating Al Areifi.

By Anonymous, 04-25-08, 05:07 PM

Dubai should act against scamsWhere there is a lot of money the smarties arrive to scam the punters. This al areifi crowd have really done a number on people. The Dubai government shouldn’t stand back and let them get away with it. Selling all the apartments to individuals and then selling the whole building to somebody else is just straight forward theft and fraud. The Saudi Arabian authorities should act as well because this is a Saudi company. What confidence can people have in these gulf markets when this sort of nonsense goes on?

By Anonymous, 04-25-08, 08:09 PM

Few bad apples doesn’t mean you throw out the whole caseYes there are scams and frauds in Dubai, just as there are everywhere. Mostly though I think investment in theis place is safe. The government needs to stamp out the bad guys because it affects how people perceive the market.

By Anonymous, 04-28-08, 01:50 PM

These thugs have to be stopped. Whilst these guys are living the lavish lifestyle, we are repaying our loans to pay for them to do so. I am still pursuing these people and find it a huge disappointment that UAE have no laws against this or protection for people who invest from abroad. It was particualrly enlightening that these guys are residing at one of the sheikhs hotels.. Does that mean he thinks all of this is ok?????

RERA – Dubai master developer Nakheel will take legal action against any sub developer that fails to deliver

original published
http://www.arabianbusiness.com/518551-nakheel-to-take-legal-action-over-late-projects?ln=en

Dubai master developer Nakheel will take legal action against any sub developer that fails to deliver projects on time, the company’s CEO told ArabianBusiness.com on Tuesday.

Speaking at the Arabian Travel Market (ATM) in Dubai, Chris O’Donnell said Nakheel has introduced a clause into all its sales contracts to stamp out late delivery of projects.

“Nakheel sales contracts will now include definite timeframes on the development of the land we sell, if projects aren’t commenced within that certain time frame, we take action against that developer. That’s something we have been focused on that for the last 18 months,” he said in an interview.

O’Donnell’s remarks follow news that Dubai’s real estate watchdog is investigating four developers for what appears to be the non-delivery of projects.

RELATED: Four developers under investigation

Real Estate Regulatory Agency (Rera) CEO Marwan bin Ghalita said on Monday the firms were being subjected to an “internal audit of transactions”, stating that “we cannot let people promise and not deliver in Dubai”.

He did not reveal which companies were being investigated.

O’Donnell said praised Rera’s efforts and encouraged the watchdog to ramp up its probe to sure up investor confidence in the market, which has been shaken in the last few months with the Damac Properties saga and ongoing investigation of Deyaar’s former CEO.

RELATED: Deyaar CEO detained, faces investigation

“I think that’s great, I think they [Rera] should investigate more. It’s very important international and local investors have confidence there is a local government body with teeth and who will take action,” he said.

“It’s important for them [Rera] to take action, and been seen to take action.”

Nakheel was involved in resolving the depute between Damac and investors after the developer in April cancelled its Palm Springs project on the Palm Jebel Ali five years after launch. Infuriated investors were threatening legal action until Damac reversed its decision.

RELATED: Damac will continue Palm Springs project, says chairman

“We were involved with the Damac resolution, it was an unfortunate turn of events but I think it was a right outcome. The customers are getting what promised, Rera intervened and that’s very positive,” O’Donnell said.

O’Donnell said he was not worried there were more Dubai non-delivery scenarios in the future because the government had proved it would take a stand against such action.

“I think it’s sent a very strong message to anyone who is thinking of taking that path, don’t do it because you won’t get away with it.”

O’Donnell would not be drawn on the height of its ‘Tall Tower’ project, which could eclipse Emaar Properties’ Burj Dubai.

A source at Australian architects Woods Bagot told ArabianBusiness.com last month the project, also known as Al Burj, would be 1,200 metres high and located on the Arabian Canal, a $61 billion project being developed by Limitless.

Comments:

buyers should have the opportunity to take action over any projects delays
Posted by hella.g, dubai, uae on 7 May 2008 at 12:52 UAE time

agree!!!!
we should have the opportunity to take also action against any developer who did not deliver any project on time
I have bought an apartment in Dubai Sport city, and I have just been advised that it has been delayed to MID 2009 instead october 2008
such a shame

Nakheel to take legal action
Posted by Wilhelm Niederhauser, Sharjah, UAE on 7 May 2008 at 10:18 UAE time

It seems that Nakheel looks only at delays of sub developers. How about cleaning up their own doorstep ? I am a buyer of an apartment in International City – France. Nakheel delayed the hand over by 14 months ? Would they take legal action against themselves ?

RERA :1560 Dubai Projects – 476 of them have trust account

Developers deposit Dh4b in escrow accountsBy a staff reporter 6 May 2008
DUBAI — A total of Dh4 billion has been deposited by developers in escrow accounts with 33 banks approved by the Dubai Real Estate Regulatory Agency (RERA), said Marwan bin Ghulaita, the agency’s CEO.

Speaking at the regular monthly meeting of the Dubai Property Group (DPG), Bin Ghulaita announced that the number of projects registered with RERA amounted to 1,560 projects, 476 of them have trust account.

He noted that by the end of April, RERA had registered 710 developers, 1,487 brokers’ offices and 2,909 agents.

RERA and Dubai Land Department representatives presented the latest procedures and regulations for registering and transferring freehold properties in Dubai to over 300 DPG members. In addition to Bin Ghulaita, Mohammed Sultan Al Thani, Assistant Director General of the Dubai Land Department and Khalifa Al Suwaidi, IT Director at the Dubai Land Department were present.

Al Thani announced that electronic forms for real estate agents are ready and can be easily accessed through the Department’s Web site, noting that by November 1, the Land Department will not clear any property transactions without these new official forms which are only accessible to RERA accredited real estate agents.

He added that the Land Department will be introducing two registration systems: one for completed property (the register) and the other for ‘off plan’ sales (the pre-register) in the coming two weeks.

RERA Dubai – Four Dubai Developers under investigation

Four Dubai development companies are being subjected to an “internal audit of transactions”, Marwan bin Ghalita, the CEO of Real Estate Regulatory Agency (Rera) told a Dubai Property Group meeting on Sunday.

“We cannot let people promise and not deliver in Dubai,” he said.

“We want a transparent relationship between parties and have rules and regulations that will be strictly implemented.”

He declined to name the four Dubai developers under investigation.

Last month Damac Properties was involved in a controversy over an attempt to cancel its project Palm Springs on The Palm, Jebel Ali, which has since been reinstated.

Rera has a tough job regulating Dubai realty since its creation last July. Now 2,909 real estate agencies are registered and an estimated 4,000 more illegals in the marketplace have until the end of July to register or face fines.

“From November 1 only licenced agents can advertise property by law,” said Bin Ghalita. “We will not tolerate freelance agents.”

Rera has also licensed 710 development companies, 1,560 projects and 1,487 brokers since its formation, and opened 476 trust accounts worth more than $1.2 billion (Dh4.4bn) with 33 registered banks. “We also want to correct some misleading claims made by developers,” said Bin Ghalita.

“If developers say they sold out in half an hour, how is that possible? If this is advertised they must show data, and not keep us waiting for a month for it.”

In addition, Bin Ghalita said there must be no payment of percentage transfer fees to developers, who are only entitled to claim administration fees for handling such transactions. “Why should developers benefit like this?

It is not their business, we do the transfers.

“He said buyers and sellers should “refuse to pay extra transfer fees”. Bin Ghalita said the proper registration fee is a total of two per cent: one per cent for the buyer and one per cent for the seller.

“Nobody has the right to charge anything else, and please tell me if they do,” he added.

Wall Street Journal – Scandals in Dubai Cast a Cloud

original published Wall Street Journal http://online.wsj.com/article/SB120941603017750659.html
and
http://www.zawya.com/story.cfm/sidDN20080428017680/lok233629080428?weeklynewsletter&zawyaemailmarketing

Some Problem Deals In Real Estate May Dent Trust
By MARGARET COKERApril 29, 2008; Page C2

DUBAI, United Arab Emirates — This city-state’s real-estate market is booming. Massive building projects scrape the sky. Sales and rental prices appear buoyant as investments flow in from other oil-rich Persian Gulf states, the former Soviet Union, India and Iran.

But a series of legal tussles and property-related scandals could dent foreign-investor confidence and tarnish the business-friendly reputation the government has tried so hard to burnish.
Earlier this month, the chief executive of one of Dubai’s largest publicly traded developers was jailed. And two disputes involving European and U.S. investors have raised concerns about Dubai’s regulatory and legal safeguards.
Foreigner-Friendly

The U.A.E., a collection of seven, semiautonomous emirates, was the first of the Arab Gulf states to allow foreign-property ownership. The country, a major oil producer, remains at the center of the Gulf region’s construction surge. More than a third of the estimated $1.2 trillion in projects under way in the region are in the oil-rich U.A.E., according to a report by the London-based Middle East Economic Digest, which tracks building projects.

While Dubai lacks the big oil reserves of its neighbor Abu Dhabi, it has diversified away from petroleum, building a reputation as a hub for tourism, business and transportation. Crucial to that strategy are its development projects.
Dubai has regaled tourists and investors alike with megaprojects such as the construction of Burj Dubai, the world’s tallest building, and the planned Palm developments, three separate man-made island clusters in the shape of palm trees.

“The perception of Dubai is based on the Burj, the Palm trilogy and sunshine 365 days a year. So far, you could call it a successful marketing campaign,” said Martin Kohlhase, a senior analyst in Dubai for Moody’s Investors Service, the credit-rating company. “There is so much at stake.”
Marwan bin Ghalita, chief executive of Dubai’s Real Estate Regulatory Agency, said he has worked hard over the past few months to improve rule making and enforcement among Dubai’s 742 licensed developers. “We are doing a very good job, but there are still lots of things to do to achieve awareness about the rules and procedures here,” said Mr. bin Ghalita.

Deyaar Development PJSC said earlier this month that its former chief executive, Zack Shahin, had left the company and was being held by Dubai police. The company, listed on the local stock exchange, disclosed the moves after the Zawya Dow Jones wire service reported the arrest.
Mr. Shahin, a U.S. citizen, is being held as part of an investigation into alleged financial wrongdoing at the company. In a jail-house interview, he told the wire service he was innocent.

Mystery has shrouded the case, raising concerns about the extent of its repercussions on the company, one of Dubai’s biggest developers. A Deyaar spokeswoman declined to comment.
Another project — on the Palm Jebel Ali archipelago, one of the three clusters — also recently became a battleground between a Dubai developer and disgruntled investors.
In 2003, Damac Properties, one of Dubai’s largest private developers, sold apartments in a 25-story building, known as Palm Springs. The company targeted British investors, eager to snap up retirement or rental properties.

Last month, Damac sent letters to those investors, saying the project had been canceled, giving few details. When investors pressed, they were told Palm Jebel Ali’s government-controlled master developer, Nakheel PJSC, hadn’t given Damac suitable land on which to build.
‘Out of the Blue’

Damac promised to return investors’ money, plus 6% interest, or give discounts on another Damac property. The Palm Springs apartments were sold for about $220 a square foot, according to investors. Current market prices in the same area are as much as $890 a square foot.
“It came out of the blue,” said Colin Murray, who lives southwest of London and bought two Palm Springs apartments.

Mr. Murray helped band together 80 investors in the United Kingdom. They filed a formal complaint with Dubai’s Real Estate Regulatory Agency. Nakheel denied it had caused the project cancellation, and regulatory officials launched talks between Nakheel and Damac. Damac then told investors that the project was back on.

The agency’s Mr. bin Ghalita said Dubai law gives Damac six months to start construction. He said he “would be keeping my eye” on the situation.

The controversy over Palm Springs was just the most prominent in a series of property-investor complaints. The local English-language press has reported stories of middle-class families being bilked by unlicensed brokers or unscrupulous developers who have taken large deposits and failed to deliver. And then there are delays in finishing construction. Damac has completed only 18% of its $30 billion real-estate portfolio.
Financiers in Tussle

It isn’t only small investors getting ensnared. U.S. private-equity firm Capital Partners, a real-estate-development arm of McKinley Reserve, of Wisconsin, is in a $1 billion legal dispute with Tecom Investments, a subsidiary of Dubai Holding, which is owned by Dubai’s ruler, Sheik Mohammed bin Rashid Al Maktoum.

In 2005, Capital Partners and Tecom signed a contract allowing the Americans to develop a 15-hectare site called Riverwalk. Months later, however, the deal had turned sour. Capital Partners accused Tecom of selling it land that it didn’t own, specifically, almost a hectare that was a designated archaeological site.

With $10 million already sunk into the project, Capital Partners refused to make a scheduled second payment to Tecom until the ownership issues had been worked out. Tecom said that missed payment was grounds to terminate the contract. The case is before the Dubai International Arbitration Center, an independent tribunal.

Rera Dubai CEO Marwan bin Ghalita – There are no complaints – it`s all missunderstanding !

original published GrulfNews

http://www.zawya.com/story.cfm/sidGN_25042008_10208297

Friday, Apr 25, 2008

Gulf News

Dubai: Miscommunication and lack of transparency are the major concerns among real estate investors in Dubai, Marwan Bin Galita, chief executive of Dubai’s Real Estate Regulatory Authority (Rera), said.

Developers will have to work to make the market more sustainable, he said in a wide-ranging interview on Dubai’s booming real estate market, which, many analysts feel, is overheated. “They are not transparent,” he said.

Galita, born in the Shindagha area of Dubai on November 27, 1972, graduated from California State University in Fresno with a BA in Surveying and Engineering. He returned to Dubai and joined the Land Department in February 1995 as a surveyor, doing field work for nearly four years.

After becoming deputy chief of the section, and later head, Galita decided it was time to do an MBA in human resources from the Advanced Technology Institute in Alexandria, Egypt.

After becoming technical director at the Land Department, he managed the surveying, IT and filing and archiving sections.

Galita was chosen as a candidate for the Shaikh Mohammad Bin Rashid Young Leadership Programme, in which he participated for two years.

He was appointed CEO of Rera in August 2007.

Gulf News spoke to Galita on the many complaints that have been flooding Dubai’s property sector in recent weeks.

Gulf News: What is happening in Dubai’s real estate sector right now? Why are there so many complaints?

Bin Galita: There is a lot of misunderstanding in the market, from the developers’ point of view and from investors’ point of view. And to tell you the truth, developers aren’t being transparent with us.

We are trying to introduce something called “Stop wondering, start knowing”. The real estate market is good for everyone in Dubai and the government has invested money and trust and support, but even with all our efforts at Rera, people are still wondering. They need to go through the proper channels, get all the information before doing anything.

With projects being cancelled all the time, people are concerned that certain developers have run off with their investments. What do you say to this?

There are no complaints; it is all misunderstanding. If someone comes to me saying a developer has taken money, I have to do three things: I check [if] the developer is registered with me, this is the first security check. Then I check [if] the project is approved and I check if he has a trust account.

If these three are in place, I will say relax, your money is safe in one of two places. It is either already invested in the construction of the project or it’s in the trust account. There is no third place. No new project will come to Dubai without a trust account.

How many developers have registered with the Land department?

The latest number of registered developers is 608. And approximately 20-30 per cent is made up of new developers who have not yet launched anything.

Rera now have 300 projects registered and Dh1.4 billion in activated trust accounts spread over 10 banks. But there are also other accounts still under process.

So the delays in construction and project handover shouldn’t be a cause for concern?

Yes, there are delays in the market, but we have to look for the reason. Delays happen all over the world, and especially here with all the projects Dubai has. It’s normal. What is abnormal is to ask a question and never get an answer. This is what annoys investors. We are sending e-mails to these developers and asking questions. They don’t tell us anything.

Are developers doing enough to increase investors’ trust in them?

Developers are not fulfilling doing their social responsibility correctly. They are focusing on things other than their core business, especially the master developers. People have trust in Dubai and most of the developers wouldn’t even exist on the world map if it weren’t for Dubai. They have to take their responsibilities seriously and educate people. They just want the extra buck.

Do you think the real estate sector is stable? Many people come to Dubai to invest in real estate, reap the rewards and leave. This can’t be making the sector more secure.

I want to encourage people to think of long-term investments. Some real estate agents are encouraging people to come from all over the world with one target: Come to Dubai for a month, you can make Dh100,000 and then leave. And this hurts the economy.

What is your vision for Dubai as head of Rera?

This is the only job I’ve had since I came back from the States. And the real estate sector is very important for Dubai’s growth. I’ve witnessed the good and the bad, the start of Emaar, the start of Nakheel, all of them.

With the Strategic Plan 2015, the market is in place, people have so much trust in Dubai, so now is the time to regulate the market.

It would be very easy to put up lots of red tape and just say no, but Dubai’s story is different. Come, be creative, consider it your haven.

I always say that home is a combination of hope and memories, and Dubai can give you both.

Watchdog: Market regulator

Dubai’s Real Estate Regulatory Authority (Rera) was set up in 2007 to regulate the real estate market in Dubai.

So far, 608 developers are registered with Rera. 300 projects are approved and Dh1.4 billion is in trust accounts.

“We want Dubai’s success story to be sustainable and to set an example for other cities around us,” said Galita.

He said anyone who has a problem with the real estate sector can contact Rera or the Land Department and check registered developers, approved projects, trust accounts and contact details online.

© Gulf News 2008. All rights reserved.

Dubai Property Scandal No. ? – Bonnington Tower

This project has been cancelled and bonnigton has returned the money back with 5% intrest on the paid amount.

Reason land dispute

__________________________________________

Apr 25, 2008Gulf NewsDubai:

Property investors in Dubai should be on their guard as two allegedly “unscrupulous property” agents are operating in the emirate, reportedly conning hundreds of thousands of dirhams out of investors both in the UAE and abroad.William Cowe and Mark Emlick are being sought in Dubai and in the UK by furious investors who claim the two men have absconded with their money.Out of three plots in Bonnington Residence in Jumeirah Village South, Strategic Property Investment (SPI) group bought two comprising about 900 apartments.

SPI has its headquarters in Scotland. Emlick is the chairman.Emlick and Cowe allegedly took a 10 per cent deposit on each of the 900 apartments, averaging about Dh579,482 to Dh651,922
per apartment.The men are based in Suite 4211 of the Grosvenor House Hotel in Dubai Marina.

Speaking to Gulf News, Emlick denied all knowledge. “What money? What plots? If someone has a problem, why don’t they call us? We’ve had no calls.”A source told Gulf News that the men’s escrow account application was recently turned down.
The brokerage firm also has not been registered with the Real Estate Regulatory Agency (Rera), Dubai’s property regulator.

There are at least 11 angry investors wanting to track down Cowe and Emlick, saying they have found it impossible to do so.Cowe told Gulf News he was in police custody in Sharjah last week and his passport remains with the Dubai court.

A spokesperson for Bonnington in Dubai said, “We know him [William Cowe] but he’s not associated with us. He’s nothing to do with Bonnington whatsoever.” Mystery also surrounds Carl Addisson – another property broker – who reportedly sold about 50 apartments belonging to Bonnington Residence to a Spanish company.

According to an insider, there is over Dh7 million in proceeds with more than Dh700,000 going to SPI in commission. The connection between Addisson and Emlick and Cowe is not clear.

Addisson is currently in Barcelona “on business” and told Gulf News he ‘wasn’t interested” in speaking.

letters2editor@gulfnews.com
© Gulf News 2008. All rights reserved.

Governance and crisis control Dubai

Posted on 26 Apr 2008

Deyaar Development, a real estate developer that has a reputation for selling off-plan projects within hours of announcing them, or getting its share offering oversubscribed more than 10 times at a time when most regional corporates dreaded the very thought of going public, has suddenly become a subject of speculation, rumours and unwanted publicity.

The company’s predicament seems to have a lot to do with its communication strategy (or lack of it) rather than the underlying case related to an alleged financial misappropriation and the arrest of senior executives. The case is under investigation and the law of the land will take its course.

It throws up key issues in terms of transparency, governance and reporting standards.

Last week, speaking at the Winning Strategies forum in Dubai, former General Electric CEO Jack Welch advised business leaders in the Gulf to deal pro-actively with the media during a crisis. “The minute you expose it (a crisis), talk about it, it moves fast through the system and you’re over it. If everybody knows, and everybody knows how you are dealing with it, you take away all the ammunition,” said Welch.

This is where Deyaar seem to have erred in its judgment. To be fair, it did indeed report the case to the stock market and the regulator, but only after rumours began to spread and reports appear in the press.

Lapses of this nature will have serious implications for the credibility of the company involved, the industry, the market, the regulators and the entire system.

Warning

Delegates at last week’s Corporate Governance Forum (CGF) in Dubai warned that the region has a long way to go before it meets international standards, while its breakneck growth and lagging controls made it prone to corporate failures in the nature of Enron and Barings Bank.

According to a survey of regional institutional investors by HSBC last year, nearly two-thirds of investors (64 per cent) said that poor corporate governance is ‘a significant barrier’ to market performance.

Despite the regional deficiencies in governance standards, it must be recognised that the UAE is one of the first countries in the Gulf that has recognised the urgent need to address the issue. The Dubai International Financial Centre’s (DIFC) Hawkamah Institute is making pioneering efforts to raise the bar. As part of several of its proactive steps, it has recently announced the launch of an environmental corporate governance and sustainability indices for regional markets, in association with rating agency Standard & Poors.

Education is the key to kicking the old habits of stowing away the skeletons. Scandals and failures are the last thing any sensible person would wish for. When they do happen, we have to learn, for the sake of not repeating the mistakes.

According to a survey of regional institutional investors byHSBC last year, nearly two-thirdsof investors(64 per cent) said that poor corporate governance is ‘a significant barrier’ to market performance.

Al Areifi Tower Dubai Marina faces financial jeopardy

By Suzanne Fenton, Staff Reporter Published: April 25, 2008, 00:45

www.gulfnews.com Dubai: Adding to the increasingly delicate real estate sector in Dubai, Al Areifi Tower in Dubai Marina is shrouded in mystery after its developer told investors he is in fin-ancial jeopardy, Gulf News has learnt. Al Areifi Tower was launched three years ago and most investors have now paid the full amount in cash to Saudi developer, Khalid Saud Al Areifi and Partner Real Estate in Riyadh, Saudi Arabia, investors said. The 30-storey tower was half-built in February when investors received faxes and emails from Al Areifi saying he was going through financial jeopardy and therefore couldn’t finish the project. Khalid Saud Al Areifi informed the investors that he would buy back the units from investors at the price they paid originally, plus 10 per cent interest. As one owner put it, “If he is facing financial difficulties, where is he going to pay us from?” It turned out that Al Areifi had sold the tower on to Eskan Properties in Abu Dhabi. However, Eskan Properties’ finance manager told Gulf News that the tower had been sold on to a private individual one week ago and so is no longer involved. “We sold the tower on again a week back,” he said. Investors filed a formal complaint to Dubai Land Department two months ago and are waiting for a response. According to the Real Estate Regulatory Authority (Rera) website, Al Areifi is not a registered developer in Dubai, holds no escrow account and the Al Areifi Tower project is not registered either. Potential investors should be cautious as Al Areifi is supposedly planning to launch new projects in Saudi Arabia and Bahrain. No one at Al Areifi’s office in Dubai was available for comment. Potential investors should be cautious as Al Areifi is supposedly planning to launch new projects in Saudi Arabia and Bahrain.

Damac Palm Springs Investors still await for the Detail

original published
http://damaconcovered.wordpress.com/

April, 24. 2007

Damac have finally sent written confirmation of the re-instatement of Palm Springs to investors.

Whilst the Palm Springs Group is pleased with this development, the communication merely rubber stamps what has already been issued to the press.

The main concern now for investors is that Damac confirm in writing details of the project, such as the plan specification, build quality, start and handover dates, and whether it is in keeping with the original contract.

One investor commented, “we will be writing to Nakheel and Damac requesting them to disclose the new plot handover date and details of any planned changes as a matter of urgency” She went on to say that the Group intend to monitor developments to ensure that any changes are compliant with the contract provisions. It is possible that investors may request a meeting with Damac to get clarification of the details and to iron out any concerns.

Barring any nasty surprises contained in the ‘detail’ of the re-location of Palm Springs, it would seem that both investors and Damac will soon be able put their differences behind them and look forward to the dream that was, and hopefully is, Palm Springs.

Let’s hope Nakheels’s and RERA’s role in helping to resolve the crisis serves to strengthen the reputation of Dubai real estate.

Damac to Honour Original Palm Springs Contract ?

original published:  17. April 2007

http://damaconcovered.wordpress.com/

Damac is to proceed with the Palm Springs development at Jebel Ali, and in keeping with the original investor contracts according to a report in Gulfnews today.

original investor contracts according to a report in Gulfnews today.

Bin Mejrin from Dubai Land Department said “Damac has undertaken to implement and accomplish the project according to the contracts with investors and has shown a keenness to abide by the laws and regulations of the department“.

ArabianBusiness.com reports that Hussain Sajwani, chairman of Damac Properties said in a statement emailed to them, “after extensive discussions, Damac Properties is pleased to announce that the Palm Springs project, located on Palm Jebel Ali has been re-instated and will be delivered to customers“.

As mentioned in an earlier post on this website, let’s hope there’s no ‘devil in the detail’ when Damac issues written confirmation to investors.

Most investors, for instance, are of the opinion that the legal action should commence immediately if there is an unreasonable or unacceptable delay in the start of construction of the project.

 

Shaky foundations

 

original published ArabianBusiness.com

http://www.arabianbusiness.com/516690-shaky-foundations

updateDate = “Wednesday, 16 April 2008 09:52″ document.getElementById(‘crumbs-dir’).innerHTML = ‘REAL ESTATE / COMMENT /’ by Rob Corder on Wednesday, 16 April 2008

Prepayment for any products or services has always warranted a discount. Pay for a flight or hotel room up front, and you expect to get a cheaper price.

Business-to-business transactions invite even deeper discounts for companies prepared to stump up cash in advance.

The reason is simple: prepayment means positive cash flow, which can be worth a considerable percentage of any transaction.

Buying property off plan is the ultimate prepayment scheme and, like all others, it comes with a discount. The reason for the discount is two-fold. First, the developer selling property benefits from positive cash flow. In some cases, sufficient property can be sold to completely finance the building project.

Secondly, there is risk involved for the buyer, and this is built into the price.

The early days of the Dubai real estate boom, when non-Emiratis were first allowed to buy property, was a time of extreme risk. The legal system had not even been changed before developers were selling forms of ownership.

I can recall people being given contracts all but scribbled on the back of a fag packet that promised the bearer that they would own a certain property when the law allowed them to do so.

His Highness Sheikh Mohammed, who was Dubai’s Crown Prince at the time, had given his word the law would change, and for early investors – typically buying from government-owned developers – that word was good enough.

These early investors were right. They took the risk and netted massive rewards. Villas selling for $1.5 million when Palm Island was first announced are now being advertised for closer to $15 million.

The developers also won. Dubai government-owned Nakheel’s business was almost entirely founded on the cash generated from selling the first Palm Island properties off plan. Emaar, also partially owned by the Dubai government, had earlier pulled the same trick with the city’s first freehold developments for expats: Emirates Hills and Emirates Lakes.

Fast-forward six years and, while the law has been considerably tightened regarding foreign ownership, new risks have emerged in the off plan market.

Several tiers of operators have emerged. Developers such as Nakheel and Emaar have been upgraded to master developers. Smaller developers, some of which have become giants in their own right, buy plots from the master developers on which to build their own skyscrapers or villa complexes.

Investors or private home buyers can buy from master developers, sub developers, or real estate brokers that buy and sell ownership rights in the same way as futures traders sell ownership of coffee beans.

And the vast majority of speculators have as much intention of ending up holding keys to a home as traders intend to own tonnes of coffee beans. They are buying and selling paper, not property.

This house or cards has been underpinned by real estate values running ahead of the cost of building property, and the willingness of people to pay ever-higher prices for it.

But these foundations are being attacked from several directions.

Construction costs rose at about twice the rate of inflation in 2007, up around 20% according to research from international consultancy EC Harris. The price of steel reinforcement rose by 46% and structural steel gained 38%, while cement prices ended the year 30% higher.

The cost of steel in the UAE has continued to soar – up 35 percent since the start of the year. And there are shortages of many raw materials used in construction, causing costly delays to projects.

Staff costs are rising due to inflation and competition for workers. Gulf currencies, which are pegged to the US dollar, are weakening. The Indian rupee, the Euro and the British pound are all strengthening, making the GCC a less attractive place to work for citizens of countries that typically provide all the labour for the construction industry.

Money is also getting more expensive in the wake of the global credit crunch. Central banks across the Gulf have been cutting base rates in line with cuts at the US Federal Reserve, but these rates have not been passed on to businesses as banks shy away from making risky loans.

Selling bonds – effectively borrowing from the private sector and wealthy individuals – has become common to finance projects. But confidence is ebbing away and these bonds will need to offer higher and higher guaranteed rates of return to attract buyers. The money to developers is again more expensive.

But the bunker buster that could blow the foundations of the off plan market apart is consumer confidence. Until last month, investors were unconcerned about holding the ownership rights to a property that would be built in the future.

Supply was low, demand was high, and real estate prices looked like going up forever.

But now there are stories that properties will not be built. There are stories that developers would rather compensate people holding ownership rights, than build the properties that they have bought.

Damac Properties’ Palm Springs development was the first cancelled project to break into the open. The shockwaves were felt as far away as London, where investors threatened to sue the developer unless the properties they had paid for were built.

Palm Springs should have been completed by the end of last year, but Damac postponed construction of the homes, and finally cancelled it completely in March. They offered to buy back the ownership rights to the properties at a premium of 6 percent per annum for every year since investors bought it.

An investment of $1 million when the project was launched five years previously would only be bought back for $1.33 million – hardly the return that the rest of the Dubai property boom was delivering over that period.

Damac claimed the cancellation was due to planning changes imposed on it by Nakheel, the master developer of Palm Jebel Ali on which Palm Springs was due to sit. Nakheel denies responsibility.

It is possible that Damac has fallen into a negative equity trap where the revenue it raised from the sale off plan of the Palm Springs development is no longer sufficient to build the project at a profit.

Five years on from the launch of Palm Springs, it is cheaper to buy back the ownership rights at 33 percent more than they sold them for than to build the properties.

UAE daily Emirates Business on Tuesday unearthed two other developers that claim to be in a similar situation. Al Arefi Marina at Dubai Marina and the A1 Tower at Jumeirah Village South, have been put on hold or cancelled, according to the paper, although the developers responsible for the projects have not made the decision on whether to buy back ownership rights, or continue to build what might be loss-making towers.

If buy-backs become common, billions could be wiped off the value of ownership rights overnight. Owners would be faced with a terrifying choice: sell at a discount rate back to the developer – perhaps 30 percent below today’s values – or press for the development to be completed, which might bankrupt the developer leaving the owner with nothing.

The rising costs afflicting the construction and development industries show no signs of abating. The only release valve might be a sharp economic slowdown, which would be as likely to send weaker developers bust as spiralling inflation.

The risks therefore are growing, while the potential rewards are shrinking in buying property off plan. The attraction of prepayment is vanishing for buyers, while becoming ever more critical to the survival of sellers.

The days of multi-billion projects being sold off-plan within hours of their launch could be over. Expect buyers to show considerably more caution in the future.

Rob Corder is the Editorial Director of ITP Publishing Group.

 

Rera Dubai probes buy-back complaints

original published:

http://www.business24-7.ae/cs/article_show_mainh1_story.aspx?HeadlineID=5606

 

Business 24/7

by Joseph George April 14, 2007

 

Real estate watchdogs have said they would not hesitate to investigate complaints about developers seeking to buy back unfinished properties from investors.

The warning from Dubai’s Real Estate Regulatory Agency (Rera) came after Damac attempted to shelve plans for the Palm Springs development, prompting an investigation by the agency.

Investors in the Dh300 million waterside project at the Palm Jebel Ali threatened legal action after the developer announced a buy-back programme. Homes in the project were sold more than five years ago but construction has yet to start.

Emirates Business spoke to a number of developers who confirmed they were buying back apartments from investors due to soaring construction costs. The companies – mostly small and inexperienced ones – launched various projects in 2006 but are yet to start work on them.

 

 In the past, developers have bought back flats and then relaunched them at higher prices. But Rera CEO Marwan bin Ghelaita told Emirates Business that the only complaint received so far concerned Damac.

 

“We have not received any other complaint from investors about developers buying back properties. But  if we do, we will definitely investigate the issue,” said bin Ghelaita.

However, several other properties in the emirate, including Al Arefi Marina at Dubai Marina and the A1 Tower at Jumeirah Village South, are reported to have been either put on hold or cancelled. The 50-storey A1 was originally scheduled for completion this year but work has yet to begin.

The increase in building costs is said to be the main reason for the cancellation of projects. Costs in the Gulf have risen by almost 30 per cent over the past year – forcing several small- and medium-sized developers in the UAE to suspend work.

Many projects marketed and sold between 2004 and the first quarter of 2007 for between Dh480 and Dh800 per sq ft are now being sold for Dh1,500.

As a result, projects where construction work is yet to begin or is half-complete have been severely affected, with contractors unable to continue without suffering substantial losses.

A senior sales representative dealing with the 31-storey Al Arefi Marina confirmed to Emirates Business that construction work was on hold, but said the company had yet to decide if it would buy homes back from investors.

“The apartments were sold for Dh800 per sqft but today the rates in Dubai Marina range from Dh1,700 to Dh2,000,” said Mohammed Ali. “We are asking our investors to visit our office and we are working on a solution to the problem. The company has already approached the Land Department.

We have the relevant documents about the increase in construction costs and will show them to our investors.”Officials dismissed speculation the project had been sold to Abu Dhabi-based Iskan. The building was expected to be completed this year, but to date only 18 floors have been built.

 

A senior sales official at Ali Moosa and Sons Contracting Group – which is developing the A1 Tower – said all transactions had been put on hold until the company applied for an escrow account.

Another official at the company said: “At present we cannot reveal any more details about the progress of the construction.”

Developers who spoke anonymously to Emirates Business said they would not hesitate to buy back properties if they could not cope with rising costs.

“There were several problems that prevented us from starting work on one project,” said a developer operating in Jumeirah Village South. “Although the completion date of the project is 2008, construction is yet to begin there. It just does not make business sense to build something for Dh1,000 per sqft that you have sold for just Dh600.”

An EFG Hermes report said construction cost inflation is being driven high by rising costs of building materials as well as labour.

A serious shortage of labour and raw materials and strong demand as well as the mandatory adoption of green building codes and health and life insurance are likely to increase construction costs in the UAE even further this year.

Over the past year the cost of cement, concrete and rebars has increased by up to 30 per cent. Steel prices have risen dramatically from Dh1,983 per tonne in 2004 to between Dh3,800 and Dh4,000 today.

A severe shortage of cement has led to black market supplies being priced at Dh450 per tonne compared with Dh328 from factories in Ras Al Khaimah – which has put a number of projects under pressure. Similarly, tender returns have risen by almost 15.5 per cent over the past year because of the increase in material costs.

 

Imad Al Jamal, vice-president of the UAE Contractors’ association’s higher technical consultative committee, said: “Nobody expected costs to go up so dramatically – the increase has overtaken all our estimates.

“Today it is very difficult to build a quality structure for less than Dh750 per sqft. In 2006 the average cost of construction per sqft stood at less than Dh250. However, today you can only build an average project for about Dh350 per sqft.”

Property consultant Rakhee Desouza said: “Buy-backs have happened several times before. Deposits are handed back and the projects are later relaunched at a higher price.”Strict rules introduced by Rera and the launch of escrow accounts have reined in the erring developers.

But Al Jamal said: “Some developers, however, try to avoid the law by buying back properties. Such a practice should not be encouraged at any cost. Anyway, gone are the days when developers dictated the terms in the market. Today it is the contractors who determine the price of property.”

ACI Dubai Fond Anleger Warnung

Dubaifonds, der Alternative Capital Invest GmbH.

Das Immobilienprojekt umfasst 45 Stockwerke oberirdisch, 3 weitere Ebenen sind unterirdisch als Tiefgarage ausgelegt. Im Erdgeschoss bis zum 13. Stock werden Büroflächen in unterschiedlichen Größenordnungen angesiedelt.

Von dem 14. bis zum 23. Stock werden 1-Schlafzimmer-Apartments, Vom 24. bis zum 31. Stock 2-Schlafzimmer-Apartments, vom 32. bis 35. Stock 3-Schlafzimmer-Apartmens, vom 36. bis zum 41. Stock 4-Schlafzimmer-Apartments und vom 42. bis zum 45. Stock Duplex Penthouses voraussichtlich angesiedelt. Zusätzlich sind 529 Parkplatzeinheiten geplant.

Das Grundstück des Towers ist direkt in Dubailand gelegen.

Die Beteiligung läuft voraussichtlich bis zum 31.12.2009

Fondsentwicklung:

Derzeit sind nur unzureichende Informationen über Entwicklungsstand des Projekts vorhanden.

In zahlreichen Foren und nach zahleichen Expertenmeinungen wird die Erfolgsaussicht der Dubaifonds und im speziellen des III. DUBAI Tower KG sehr kritisch gesehen.

Teilweise wird von einem dilettantischen Auftritt gesprochen und davor gewarnt.

Aus unserer Sicht bestehen sowohl hinsichtlich des Kaufs des Grundstücks für die Fondsgesellschaft als auch hinsichtlich der Realisierung dieses Fonds erhebliche Unklarheiten und Risiken im Raum.

Zudem muss die Steuerliche Berechnung mit Blick auf das aufgelaufene Doppelbesteuerungsabkommen zwischen den Vereinigten Arabischen Emiraten und Deutschland als zusätzlicher Unsicherheits- und Risikofaktor gewertet werden.

Fondsbewertung:

Aufgrund der zahlreichen Unsicherheiten und erheblichen Risiken an diesem Fonds raten wir Anlegern des III. DUBAI Tower KG dringend mit der Deutschen Anleger Stiftung Kontakt aufzunehmen.

Die Deutsche Anleger Stiftung hat bereits Ihre Korrespondenzanwälte mit der Begutachtung der III. DUBAI Tower KG beauftragt.

Wenn Sie dieses bestellen möchten wenden Sie sich bitte an:

Kontakt@DeutscheAnlegerStiftung.de

Oder

Deutsche Anleger Stiftung

Stichwort: III. DUBAI Tower

Pettenkoferstr.40 80336 München

Dubai – Drohen erneut Millionenverluste für Immobilien Anleger – Investoren bangen um 70 Millionen Euro-Staatsanwaltschaft ermittelt

German Investors facing 70 Million Euro losses Dubai-1000-Hotel Investment Fund

original published:
DieWelt
http://www.welt.de/welt_print/article1886858/Statt_versprochener_Luxusherberge_nur_eine_Baugrube_im_Wstensand.html

10. April 2008, 04:00 Uhr

Von Richard Haimann

Dortmund – Den Anlegern seines Dubai-1000-Hotel-Immobilienfonds versprach Georg Recker hohe Renditen im Wüstenemirat. Jetzt ermittelt die Staatsanwaltschaft Dortmund gegen den Diplom-Finanzwirt aus Hamm wegen Betruges. “Wir gehen einem Anfangsverdacht nach”, sagt Oberstaatsanwältin Ina Holznagel. Nach Schätzungen von Fondsanalysten könnten bis zu 70 Mio. Euro Anlegerkapital im Feuer stehen.

Mit dem aufgelegten Fonds wollte Recker insgesamt 142 Mio. Euro bei Privatanlegern einsammeln und in ein noch zu errichtendes 1000-Zimmer-Hotel im Emirat investieren. “Den Anteilszeichnern hatte der Initiator Ausschüttungen von neun bis zwölf Prozent pro Jahr in Aussicht gestellt”, sagt der Anwalt Jens-Peter Gieschen der auf Kapitalanlagerecht spezialisierten Bremer Kanzlei KWAG, die mehrere betroffene Anleger vertritt. Ursprünglich sollte das Hotel bereits im vergangenen Jahr fertiggestellt sein. “Doch bislang existiert dort nur eine Baugrube”, berichtet Gieschen, der kürzlich selbst vor Ort war. Recker selbst war für eine Stellungnahme gestern nicht zu erreichen.

Dubai war in den vergangenen Jahren Schauplatz eines gigantischen Immobilienbooms. Einheimische Gesellschaften haben in den vergangenen Jahren gigantische Projekte in dem nur 3885 Quadratkilometer winzigen Staat aus dem Wüstenboden gestampft. Darunter künstliche Inseln in Form einer Palme und mehr als 150 Wolkenkratzer, darunter den 321 Meter hohen “Burj al Arab”, das erste Siebensternehotel der Welt. Mit den Mega-Vorhaben will Kronprinz Mohammed bin Rashid al-Maktoum Dubai zu einem Touristenmekka im Nahen Osten wandeln und damit für die Zeit vorsorgen, wenn die Ölquellen im Emirat versiegen.

full story http://www.welt.de/welt_print/article1886858/Statt_versprochener_Luxusherberge_nur_eine_Baugrube_im_Wstensand.html

Second Dubai Damac Project – Haz Tower Business Bay canceled – Another U-turn…. (Damac project now back on track ?)

United Arab Emirates: Thursday, April 10 – 2008 at 10:13

UAE-based property developer Damac yesterday said its Haz Tower project in Dubai’s Business Bay is back on track following complaints by investors, reported Gulf News. After learning that the developer had planned to cancel the project, around 10 investors yesterday met officials at the Land Department to complain against the company. Following the meeting, Niall McLoughlin, senior vice-president of corporate communications at Damac, said the project is ‘definitely going ahead’. This latest showdown arises just a week after Damac came under fire for cancelling the Palm Springs project on the Palm Jebel Ali. Damac, the largest private sector developer in the UAE, has launched 80 projects but handed over only two so far.

Damac Properties appears poised to formally announce the reversal of its decision to axe the Palm Springs project, according to investors.

original published: Arabian Business 10.April 2008

http://www.arabianbusiness.com/516215-damac-properties-appears-poised-to-formally-announce-the-reversal-of-its-decision-to-axe-the-palm-springs-project

Investors have said they stand to lose million of dirhams after the Dubai-based developer cancelled the 25-storey beachfront development last month on the Palm Jebel Ali, offering compensation below current market value.

The saga has been widely reported in the international media, creating bad publicity for Damac in key markets it is looking to attract investment from, such as the UK.

Investors said they received calls earlier this week from Damac informing them the Palm Springs project is to be re-instated, according to a statement on the website of a Palm Springs investors group.

The project will be located on the new plot provided by master developer Nakheel, with some possible changes to building plans, the statement says.

Niall McLoughlin, senior vice president of corporate communications at Damac, said in a statement emailed to ArabianBusiness.com on Thursday that the developer would shortly announce a decision on the project.

“We have been in contact with our customers in relation to Palm Springs and will be making a formal statement in due course. As soon as I am in a position to comment, we will contact you directly,” McLoughlin said, without giving further details.

Damac had said the cancellation of the project five years after launch was due to “redevelopment of the plots”, stating that the development “cannot be situated on the re-allocated plot”.

However, this explanation was brought into question when Palm Jebel Ali master developer Nakheel said it had informed investors of changes to the masterplan over 10 months ago.

A group of more than 60 UK-based investors are threatening to take Damac to court unless the developer reverses its decision and continues with construction.

The group, which last month stormed the London launch of Damac’s Jumeirah Village South project, has given the developer until April 11 to change its mind or face legal action.

Damac also changed its mind about the cancellation of its Haz Tower in Business Bay on Wednesday, after investors complained about its plans to pull the project, UAE daily Gulf News reported.

The Haz Tower was launched in July with a value of around 240 million dirhams. The tower is now worth an estimated 660 million dirhams, the newspaper said.

Reason for axing Palm Springs questioned
Palm Jebel Ali master developer Nakheel ‘very surprised’ at Damac project cancellation.

Damac Properties appears poised to formally announce the reversal of its decision to axe the Palm Springs project, according to investors.

original published: Arabian Business 10.April 2008

http://www.arabianbusiness.com/516215-damac-properties-appears-poised-to-formally-announce-the-reversal-of-its-decision-to-axe-the-palm-springs-project

Investors have said they stand to lose million of dirhams after the Dubai-based developer cancelled the 25-storey beachfront development last month on the Palm Jebel Ali, offering compensation below current market value.

The saga has been widely reported in the international media, creating bad publicity for Damac in key markets it is looking to attract investment from, such as the UK.

Investors said they received calls earlier this week from Damac informing them the Palm Springs project is to be re-instated, according to a statement on the website of a Palm Springs investors group.

The project will be located on the new plot provided by master developer Nakheel, with some possible changes to building plans, the statement says.

Niall McLoughlin, senior vice president of corporate communications at Damac, said in a statement emailed to ArabianBusiness.com on Thursday that the developer would shortly announce a decision on the project.

“We have been in contact with our customers in relation to Palm Springs and will be making a formal statement in due course. As soon as I am in a position to comment, we will contact you directly,” McLoughlin said, without giving further details.

Damac had said the cancellation of the project five years after launch was due to “redevelopment of the plots”, stating that the development “cannot be situated on the re-allocated plot”.

However, this explanation was brought into question when Palm Jebel Ali master developer Nakheel said it had informed investors of changes to the masterplan over 10 months ago.

A group of more than 60 UK-based investors are threatening to take Damac to court unless the developer reverses its decision and continues with construction.

The group, which last month stormed the London launch of Damac’s Jumeirah Village South project, has given the developer until April 11 to change its mind or face legal action.

Damac also changed its mind about the cancellation of its Haz Tower in Business Bay on Wednesday, after investors complained about its plans to pull the project, UAE daily Gulf News reported.

The Haz Tower was launched in July with a value of around 240 million dirhams. The tower is now worth an estimated 660 million dirhams, the newspaper said.

Reason for axing Palm Springs questioned
Palm Jebel Ali master developer Nakheel ‘very surprised’ at Damac project cancellation.

Comments – The Damac Case Dubai – Caveat Emptor applies to homeowners only!

original published:

http://www.arabianbusiness.com/515293-reason-for-axing-palm-springs-questioned?ln=en

Caveat Emptor applies to homeowners only!
Posted by Samer Helmy on 2 April 2008 at 15:33 UAE time

caveat emptor is the latin origin of the well-known doctrine of “Buyer beware”. That applied in the old days and today to homeowners selling present property to other individuals, and it was against the state of a property as it was the buyer’s responsibility to inspect the unit and decide if the price is worth it, basically that there is no warranty. Developer’s responsibility to actually build the unit is NEVER under caveat emptor, it is a contractual obligation to deliver that Damac in this case clearly violated and is simply counting on investors to bend over and let it slide. As a matter of fact, even in defects and quality issues, the developer (builder-seller) STILL cannot be protected by caveat Emptor as they are responsible for what they build. Today for example in the US they have what is called Implied Warranty of Fitness that developers HAVE to deliver the property free of any defects.

Greed or whatever, the investors invested and signed a contract that forces the developer to build if he can, and the fact that DAMAC did not put in the foundations for over 4 years before Nakheel reorganized the plots is not the investors fault. I say take them to court and make them pay full damages.

Regards,

Samer Helmy

Palm Cancellation
Posted by Sussex Sheikh, London, UK on 2 April 2008 at 13:51 UAE time

There is an old Latin phrase ‘caveat emptor’. This applies as much in Ancient Rome as it does in 21st Century Dubai.

Believe Nakheel
Posted by Riham, Dubai, UAE on 2 April 2008 at 10:49 UAE time

Believe Nakheel! I do realise that they are late on a few projects, but as a buyer, I’d just purchase from them or Emaar. The only two developers I have trust in and I’m saying this as an expat! Have never believed Damac and am sure it is to do with greed. All the money from the downpayments was probably “snatched” up and spent a long time ago….perhaps this is just the beginning of a complete breakdown! Raffle draws on private jets, islands, luxurious cars, etc to attract people? Good idea, sure…but for how long? I can just imagine how many projects are financed to completion in Dubai from the money received as downpayment for newly announced ones…how can you break even then or make a profit? No way….I can just imagine what kind of strict controls the Dubai Government will introduce soon for private developers. Am sure they should start off by asking them to deposit hundreds of millions of dirhams as a safety deposit to protect buyers!

Palm Springs
Posted by Sanjay Amar on 2 April 2008 at 10:03 UAE time

While people talk about potential losses that may arise on account of the shelving of this project, there are damage control measures one could look at.
One idea that immediately comes to my mind is holding the subject land on which the property was to be constructed in trust for the registered buyers of the property, liquidating the land at current values and making proportionate payments.
At least the registered buyers could benefit from the appreciation of the land.
This could be a better solution than the two alternatives offered.
And, if payments have been made to Damac on percentage of completion basis, the damage would be minimised further.

Palm Cancellation
Posted by prahlad, Sharjah, United Arab Emirates on 2 April 2008 at 09:59 UAE time

The probem has got to have its genesis in the turmoil currently facing the construction industry which is bleeding on every front for reasons outside its control. Acute scarcity of resources – notably materials and manpower – coupled with escalation of costs to levels beyond belief on the one hand and fixed-price contracts on the other, have all had a devasting effect on the industry. Palm cancellation is, in my veiw, just tip of the ice-burg.

Palm Cancellation
Posted by Fred, Dubai, UAE on 2 April 2008 at 08:01 UAE time

I’m afraid greed sometimes backfires, for every one investor that may lose money, there are possibly 5,000 others who are waiting for the bubble to burst and help reduce the over inflated housing market and give others a chance to live and work in Dubai.

SHOW ALL COMMENTS

Confirmation
Posted by Ilyas, London on 1 April 2008 at 20:25 UAE time

And Damac were trying to blame Nakheel all along… Simply a case of – how can we make more money – by stuffing the investors and taking their share of the rise in property prices!

Nakheel’s Comments
Posted by Lee, Dubai, UAE on 1 April 2008 at 20:10 UAE time

This is getting interesting!! Damac says one thing and now Nakheel has come out and contradicted Damac’s “story”. Hmmmm? Who should we believe???

The Dubai government needs to quickly get involved or this story is soon going to become world news. If the group of UK investors proceed with taking Damac to court the UK press is going to be all over this story and it will not be good for Dubai’s reputation or image.

Update – Damac Palm Springs Property Scandal Jebel Ali Palm

original published: April 7,2008

http://overseascafe.blogspot.com/2008/04/palm-springs-dubai-damac-cancel-project.html

No sooner was this posted than the problem seems to have been resolved, or at least there is some hope that it will be. The following has been received from the Investor’s group:

“This statement has come from RERA today,they are the Real Estate Regulatory Authority in the Emirates. Mounting media pressure and evidence against Damac have them under pressure to find a solution on their decision and we await good news!

Should this good news not develop The Palm Springs Investors group will proceed with legal action.

Senior Management from Damac have declared now that they will be in contact with a proposal no later than the 21st of April.

FURTHER UPDATE:

On mature reflection the Investors group have decided that this latest piece of news, which they’ve not received in writing, is merely a ruse by Damac to stop them protesting until after the launch of a new development by the company on April 13th. Hence, they state that their campaign of awareness raising will continue until they receive in writing confirmation that Damac are actually re-assessing their position on this matter.


xxx: Deutsche Version German Version

09.April 2008 Immobilien Dubai Millionen Verluste für Investoren von Damac Palm Springs Projekt – Nakheel Master Developer Jebel Ali Palm – Immobilienskandal – Wie sicher ist der Immobilienmarkt in Dubai ?

Damac Holding chairman Hussain Sajwani

High riser

By Shalaka Paradkar, Staff Writer
Published: July 20, 2007, 00:12

Damac Holding chairman Hussain Sajwani started work at his father’s shop in the Deira Souq at the age of 3. The harsh experience drove him away from the world of business until he eventually realised that the entrepreneurial spirit was in his blood. The head of the largest private property developer in the UAE tells Shalaka Paradkar that you only really learn through failure

It’s hard to believe that Hussain Ali Habib Sajwani once hated the idea of being a businessman. After all, he was the school boy entrepreneur who made a princely profit of Dh2 for every 24 chocolate bars he sold his mates.

“I ate all my profits,” recounts the chairman of Damac Holding Co LLC with mock seriousness.

The candy has been traded for a real estate empire and the profit has swollen to an estimated net worth of $2.1 billion. But when he was an adolescent, becoming an entrepreneur was about as welcome a notion as a root canal.

Business equalled a long, daily grind from 7am to midnight, toiling at the watch shop his father owned in the Deira Souq. Sajwani wanted, instead, to be a white-collar professional with a degree who worked regular hours.

He ignored his father’s diktat to join the family business and chose to study medicine instead. A disastrous time at medical college in Baghdad ensued, when he failed his first year and he went to the US to do an engineering degree. The rest, as they say, is history.

Destiny and genetics intervened. Sajwani rediscovered his latent entrepreneurial talents while studying in the US. During his summer break in his final year, he sold timeshare products in the UAE and made a killing. It was one of his early business ventures as an adult.

Twenty-six years later, he has been listed by Arabian Business as one of the 50 richest Arabs in the world, with a net worth of $2.1 billion.

The 53-year old Sajwani oversees a business empire spanning 18 countries, with 7,000 employees that covers real estate, hospitality, industrial projects, investment, logistics and commercial trading.

Damac Properties is the largest private developer in the region and is expanding rapidly in North Africa, Jordan, Lebanon, Qatar and the Far East.

You cannot drive on a road in Dubai without bumping into a sign advertising one of Damac’s sleek towers (there are more than 80 in its $4 billion portfolio).

The investment arm, Damac Invest, has more than $1 billion in assets. Damac Holding also operates the largest catering company in the Middle East.

An industrial engineering and economics graduate from the University of Washington, Sajwani built his empire from scratch: Damac grew from a local catering company to a global conglomerate in 20 years.

Not bad for a man who professes to live a simple life. For Sajwani, business is a bit of a game, where billions can be made or lost. “I don’t lose sleep over it. I don’t stress,” he says.

“At the end of the day, all the enjoyment and emotional fulfilment in life comes from your family. Business is fine, but the love of my wife and children means so much more.”

I

I did not dream of this kind of success. On the contrary, when I was a teenager, I used to hate business and what it represented. I had been forced to help out in my father’s shop since I was 3. As my father was hard on me, this made me hate the idea of doing business.

Even in high school, I was an entrepreneur of sorts. I would buy chocolates at wholesale prices from Bakar Mohebi in Bur Dubai and sell them for a profit at school. A lot of things in life do not happen through planning, but because they are supposed to. Call it destiny.

Do I have any regrets? No. Until I started my restaurants, I was single. My life was my work. I would get to work by 8.30am, have a burger for lunch and continue working until 10pm. Even today I don’t enjoy socialising as much as my peers … others enjoy golfing or fishing, I love working.

I am not stressed by big issues and problems. I may lose Dh1 billion, but I come home and sleep like a baby. My strategy is to continuously review my mistakes and try not to repeat them. Small problems irritate me, but not the big ones.

Me

Me and my father:
I grew up in Dubai. My father was a businessman and, interestingly enough, my mother was a businesswoman, albeit on a very small scale. She would buy fabric from the wholesale market and sell this. My family was solidly middle-class.

I had a busy childhood: going to school in the morning, attending to my father’s shop in the afternoon and being at Engineer Adnan Safarini’s office from 7pm to 9pm, as my father was also a small-time developer and handled projects out of his office.

It was a routine that did not give me much time for anything else, except to have a sandwich for dinner and fall asleep. My father kept his shop open seven days a week; he sold watches and pens in the souq.

My greatest teacher was my father. He was entrepreneurial and very hard-working, working from 7am to midnight with just an hour’s break for lunch. He taught me, pushed me and gave me a lot of knowledge.

Basically, he contributed to my love for hard work. He taught me to be precise as he was when it came to numbers, details and documentation. When I made a mistake, he was quite hard on me, so I learned the hard way not to make mistakes.

Particularly when I was in the shop. If I made a mistake while adding up figures, he would warn me the first couple of times, then the next time, it was corporal punishment.

I was an average student until Grade 8. Suddenly in Grade 9, I was the top of the class. One big reason behind that was that my father was not in favour of me going to university or even completing high school. He wanted me to join his business.

As he put more pressure on me to drop out, it had the opposite effect – I became more interested in academics. That’s been a constant in my life since childhood – whenever anyone throws a challenge at me, I perform far better than I would have otherwise.

I grew up in a very conservative family with a very tough father. Since I was the eldest, my father’s dream was that I join the family business.

And in the spirit of teenage rebellion, I was determined not to do so. Since my father was not very educated, he wasn’t sure how to handle me.

Me and my career choices:
In the last four years of high school, I made up my mind that I never wanted to be a businessman. I wanted to be a doctor or an engineer. So I joined the medical college in Baghdad.

Again, that was against my father’s wishes; he wanted me to work with him and I refused. I applied and obtained a government scholarship to study medicine in Baghdad.

Another of my entrepreneurial ventures took off when I was at university. Since it was under a socialist regime then, Baghdad had no luxury goods. Even soap had to be purchased from Kuwait.

My friends asked me to get them things when I went to Kuwait. On my next trip, some businessmen from our community asked me to bring back some more stuff – like cosmetics, which were three times more expensive in Iraq.

In Baghdad I wanted a car, but didn’t have enough money to buy one. So I borrowed money from a friend and saved some from my scholarship. That summer I went to Germany and bought a car, drove it to Dubai and sold it for a tidy profit. I then went back to Germany and bought myself a Volkswagen – another venture!

I wanted to dress well, travel the world, live well and make the money needed for these things.

However, I failed medical college. Like most things in my life, it was a blessing in disguise. The medium of instruction was English, a language I barely spoke. I arrived late … and was never able to catch up.

After I failed, I came back to Dubai. My father approached me again to join the family business and I refused again. We were on bad terms up until the time I left to study industrial engineering in the US.

I had learned many things from my Baghdad experience. It was my first failure and it affected my life; it had a bitter, harsh taste.
On the flight to the US, I wrote about nine pages on the reasons why I had failed and what I would do in the US. I still have that piece of paper.

Baghdad was the first time I had stayed away from my family. I did not use the newfound independence wisely, perhaps spending too much time socialising. But I had learned my lesson.

Me and the food business:
I returned from the US in 1981 and was quite keen to do an MBA. I was offered a job with Abu Dhabi Gas Industries Ltd (GASCO), with the provision that after two years of being employed, they would sponsor my MBA.

While I was at GASCO, I decided to start a catering business. It was a joint venture between me and a British company.

A year later, I could not go for the MBA as I had incurred a lot of losses in the business. I had a choice: to let the company go bankrupt or resign from my job and work on turning it around. I chose the latter. I think it was a good choice.

I had invested $200,000 of my own money in the company. Six months after I started the business, I realised the losses were about $1.2 million. There were vendors and creditors who had to be paid.

Our operating costs were largely manpower and food items. The British company had mismanaged it so much; they were buying raw materials from fancy supermarkets instead of at wholesale prices.

Having grown up in the souq, I went and bought my materials there, shaving 30 per cent off the price.

The other big overhead was manpower, where we had twice the number of people we needed. I had to make some hard decisions – to fire some people and change others. That was the toughest time.

The employees ganged up against me as a trade union and would not let me fire anyone. I went to Sri Lanka, where most of the workers came from, and recruited a new team of Tamil workers.

This worsened the situation, as the Tamils and ethnic Sri Lankans didn’t get along. It was quite a learning experience. But somehow, by the end of the year I had managed to turn the company around.

We then started winning more contracts and opened branches in Abu Dhabi, Muscat, Saudi Arabia and Qatar. Things were going well. Our next step was to venture into fast food. In 1988, we got the franchise for Pizza Inn.

The first year was successful, we had an early mover advantage, then we started having problems. Some big players entered the market, in particular.

The big companies threw hundreds of millions of dollars into advertising and promotions – the game had become much too big for me. Two years down the road, we had to downsize.

We took a lot of losses, we had to swallow that and move on. We shrank our operation and sold our companies in Egypt and Saudi Arabia. We closed four fast food chains and retained the few Pizza Inns we still operate in the UAE.

Me, property and high-tech investment:
In 1996 I made a lot of money on the Omani stock market. It was boom time and I played it well. At the end of 1997, I was lucky again. I sold most of my equity in the stock exchange in December, not long before its crash in February. I was plain lucky!

I poured those profits into the Dubai property market. I built four three-star hotels in the Rigga area, sold them for a profit and that was the start of my real estate business. We built five hotels in Deira before the market for 3-star hotels softened.

In 1998, I went to the US to take part in the tech boom as a venture capitalist. We invested in more than 60 internet companies. In two years there, I learned more than my 20 years of business.

I have a tremendous respect for the American way of doing things. Nobody can match them when it comes to building big businesses. Unfortunately, the tech boom did not last. We managed to break even and had to get out of it.

I do take risks, I make mistakes, but I learn and move forward. The fact that I invested in the internet and it did not do well did not put me off technology stocks. You just have to learn how to do it better and differently.

If you try something new every time you fail, you are not accumulating experience. Knowledge comes from doing the same thing, failing, and then learning how to improve on the past.

Myself

So how does it feel on being named the 28th richest Arab businessman?
It depends on how you value things. Being No 28, No 280 or even No 1 is not the issue. I enjoy my work and my success. I live a simple, humble life and am not hankering to be ranked on any billionaire’s list … it is publicity that I do not enjoy, want or like.

For the past 25 years I have been in business, we only started advertising four years ago. Now I do not have a choice in the matter, we have to advertise. We need the publicity to build our brand name.

Success in life depends on luck and God’s blessings. There are people who work harder, are more intelligent and don’t make even 5 per cent of what I make.

If you leave that aside and consider why a person is successful, I believe it’s always the same ingredients. You’ve got to work hard, work smart and do your homework. People who don’t do their homework right take blind risks.

What’s your strategy to handle irate customers?
For me, customers are always right, no matter how hostile or rude they may be. You have to solve their problems. Customer care was one of the most important things I learned in the US.

Will you slow down anytime soon?
I am not thinking of retirement. I enjoy my work, but perhaps there will be a day when I will need to slow down.
As your family grows, you need to spend more time with them. I do take more time off nowadays.

I take a couple of hours off for lunch to spend with the family. In the 17 years I have been married, every year I have taken a month off in summer and a week off in the winter to spend with my family. So it’s not as if I work around the clock.

What are your dreams for your children?
Like any father, I hope my children have a good education and, more importantly, good morals. They should be humble and not proud of their father’s wealth.

That’s the big challenge for them – and me. I come from a humble background, I built my business from scratch. They have been born with a silver spoon. They need to work hard, stay grounded and understand that no matter how big they become, they need people.

The richer you are, the more you need people. I need to be friendly with bankers, lawyers, contractors and employees. The more my business grows, the more I depend on people’s goodwill

 

Not only The case Damac- Testing time for Dubai – The boom towns

Testing time for the boom towns
updateDate = “Tuesday, 08 April 2008 04:00″
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by Angela Giuffrida on Saturday, 05 April 2008
original published: http://www.arabianbusiness.com/515463-testing-time-for-the-boom-towns

Boom towns are havens in the way they offer an endless number of business opportunities, usually starting with a clean slate on which ideas can run wild.Emerging sectors of any particular industry operate in much the same way, attracting investment for a relatively short-term gain.The early stage of their rise tends to be described as a ‘boom’, with the ensuing phases spent speculating on when ‘the bubble will burst’.

Unfortunately, that bubble is prone to antagonisation by another trait of a rapidly growing and open market: greedy investors.This is not the first time a project in Dubai has provoked fury among those, mainly from the UK, looking for a place in the sun.In 2006, the owner of the Light House in Dubai Marina allegedly fled overnight, leaving the tower standing 15-storeys and 90 investors around US $3.7 billion out of pocket between them.The same fate descended on a residential project in Sharjah. Only this time the owner stuck around to face the wrath, and in a letter to investors admitted the company had failed to secure a building permit. This admission came two years after investors had placed their deposits. As with the Palm Springs saga, the compensation offered was little in comparison to the amount they were expecting to gain from their new homes.The backgrounds of project owners are often questioned whenever a debacle arises, with some rumoured to have baked cakes for a living before trying their luck at building something of more than three tiers.Many have sales offices scattered across several parts of the globe, without even having a completed project to show as part of their marketing remit. Another characteristic of a boom town is its sensitivity to pitfalls, where even the slightest upheaval can shatter confidence, leaving the reputation of an entire economy in tatters.It wouldn’t be so bad if developers admitted to overstretching themselves and failing to envisage that having so many projects on the go might just impact the resources needed to get them finished. Such a situation makes you wonder if the bigger fools are actually the ones living millions of miles away who buy off-plan

Not only The case Damac- Testing time for Dubai – The boom towns

Testing time for the boom towns
updateDate = “Tuesday, 08 April 2008 04:00″
document.getElementById(‘crumbs-dir’).innerHTML = ‘CONSTRUCTION & INDUSTRY / COMMENT /’
by Angela Giuffrida on Saturday, 05 April 2008
original published: http://www.arabianbusiness.com/515463-testing-time-for-the-boom-towns

Boom towns are havens in the way they offer an endless number of business opportunities, usually starting with a clean slate on which ideas can run wild.Emerging sectors of any particular industry operate in much the same way, attracting investment for a relatively short-term gain.The early stage of their rise tends to be described as a ‘boom’, with the ensuing phases spent speculating on when ‘the bubble will burst’.

Unfortunately, that bubble is prone to antagonisation by another trait of a rapidly growing and open market: greedy investors.This is not the first time a project in Dubai has provoked fury among those, mainly from the UK, looking for a place in the sun.In 2006, the owner of the Light House in Dubai Marina allegedly fled overnight, leaving the tower standing 15-storeys and 90 investors around US $3.7 billion out of pocket between them.The same fate descended on a residential project in Sharjah. Only this time the owner stuck around to face the wrath, and in a letter to investors admitted the company had failed to secure a building permit. This admission came two years after investors had placed their deposits. As with the Palm Springs saga, the compensation offered was little in comparison to the amount they were expecting to gain from their new homes.The backgrounds of project owners are often questioned whenever a debacle arises, with some rumoured to have baked cakes for a living before trying their luck at building something of more than three tiers.Many have sales offices scattered across several parts of the globe, without even having a completed project to show as part of their marketing remit. Another characteristic of a boom town is its sensitivity to pitfalls, where even the slightest upheaval can shatter confidence, leaving the reputation of an entire economy in tatters.It wouldn’t be so bad if developers admitted to overstretching themselves and failing to envisage that having so many projects on the go might just impact the resources needed to get them finished. Such a situation makes you wonder if the bigger fools are actually the ones living millions of miles away who buy off-plan

19thFloor Dubai

Hush money, phantom buyers and feeding the Vegas mentality
The furious response to the cancellation of Damac’s Palm Springs project has created a level of investor mistrust that threatens to rock the entire Dubai real estate market, tainting good and bad. One result is that former real estate sales staff are more willing to recount examples of bad practice. The methods listed below are described by one former sales manager as being “common knowledge in the market”.

The Palms Springs Group Resolute in its Stance

If Damac was hoping that delaying their response to investors demand for justice would cause the Palm Spring Investors Group to fragment, then the news for Damac is not very good. Inside sources report that the Group has, if anything, become even more united and resolute in their aim to ensure Damac does not short-change their members. It is clear that the Group is not ready to accept anything less than that Damac
read more herehttp://damaconcovered.wordpress.com/2008/04/07/the-palms-springs-group-resolute-in-its-stance/

19thFloor Dubai

Hush money, phantom buyers and feeding the Vegas mentality
The furious response to the cancellation of Damac’s Palm Springs project has created a level of investor mistrust that threatens to rock the entire Dubai real estate market, tainting good and bad. One result is that former real estate sales staff are more willing to recount examples of bad practice. The methods listed below are described by one former sales manager as being “common knowledge in the market”.

Damac hints at backtrack on Palm Springs axe

updateDate = “Sunday, 06 April 2008 19:05″
document.getElementById(‘crumbs-dir’).innerHTML = ‘REAL ESTATE / NEWS /’original published http://www.arabianbusiness.com/515742-damac-hints-at-backtrack-on-palm-springs-axe

by Dylan Bowman on Sunday, 06 April 2008

Under fire developer Damac Properties on Sunday showed the first signs it may backtrack on its decision to axe the Palm Springs project on the Palm Jebel Ali following a backlash from investors around the world.

Investors have said they stand to lose million of dirhams after the Dubai-based developer cancelled the 25-storey beachfront development last month, offering compensation well below current market value.

The saga has been widely reported in the international media, creating bad publicity for Damac in key markets it is looking to attract investment from, such as the UK.

“We have had a number of representations from investors on the decision to cancel the Palm Springs project,” Niall McLoughlin, senior vice president of corporate communications, said in a statement emailed to ArabianBusiness.com.

“We are looking at various scenarios and will make a statement in due course.”

Damac said last month the cancellation of the project five years after launch was due to “redevelopment of the plots”, stating that the development “cannot be situated on the re-allocated plot”.

However, this explanation was brought into question last week when Palm Jebel Ali master developer Nakheel said it had informed investors of changes to the masterplan over 10 months ago.

Nakheel also said it had “positive” correspondence with Damac as recently as February, in which the developer gave no indication that it would not be going ahead with the project.

A group of more than 60 UK-based investors in the project are threatening to take Damac to court unless the developer reverses its decision and continues with construction.

The group, which last month stormed the London launch of Damac’s Jumeirah Village South project, has given the developer until April 11 to change its mind or face legal action.

The saga seems to have reduced confidence in the Dubai property market, according to a recent ArabianBusiness.com spot poll.

Two-thirds of respondents said news of the cancellation had made them think twice about buying property off-plan, stating that it had made them “very cautious about the Dubai property market”.

Dubai has a massive secondary market for off-plan real estate, with units passing through numerous hands before a development is finally built as investors capitalise on soaring prices in the sector to make quick profits without putting up huge amounts of capital.

Damac Palm Spring collapse shakes investor confidence

original published:
http://www.arabianbusiness.com/515467?start=0

Arabian Business by Conrad Egbert on Saturday, 05 April 2008

With investors threatening legal action over Damac’s cancelled Palm Springs project, Conrad Egbert takes a looks at how the outrage is threatening investor confidence.The cancellation of Damac’s Palm Springs has shaken confidence among some investors in the Gulf real estate market.And it has also drawn attention to how tight the market is becoming in the region.

An incident in London last month highlighted the extent to which property investors are losing faith in the market.Angry investors in Damac’s axed Palm Springs project stormed the company’s launch of Jumeirah Village South at the Carlton Hotel in Knightsbridge, circulating flyers to potential investors with negative publicity on the Palm Springs story.An excerpt from the flyer obtained by Construction Week read: “We, the Palm Springs Investors Group, will be taking Damac to court in order so that Damac either reverses its decision and proceeds with constructing Palm Springs on Palm Jebel Ali, or it provides a like-for-like apartment at the same cost, terms and conditions on a new Damac development on Palm Jebel Ali, or it provides financial compensation at current market rates for Dubai Waterfront/Palm Jebel Ali.”We attended similar evenings to this launch and were duped into buying from Damac. We trusted and believed in Damac but strongly warn that you do not make the same mistake as us.”Damac has said it cannot build the project on the plot Nakheel reallocated on Palm Jebel Ali and has instead written it off as a ‘force majeure’.According to UK investor Robert Miller, who bought a unit in Palm Springs in 2003, investors could stand to lose an estimated US $296,000 (AED1.09 million) because of the cancellation.Last week, a letter from The Palm Springs Investors Group, which is made up of more than 50 members, was sent to Damac, demanding that the axed property be constructed on the reallocated plot or else the company would face legal action.Nakheel has also been pulled into the drama with some investors suggesting that if the reallocated land is not good enough for the construction of Palm Springs, and the ‘force majeure’ clause is accepted, then Nakheel should arrange compensation for them.But Nakheel has expressed surprise over Damac’s stance, with the company’s Palm Jebel Ali managing director, Marwan Al Qamzi, saying:”Our last interaction with Damac took place in February of this year and was one of positive engagement, which left us with the firm view that Damac was proceeding with the project. We are extremely disappointed to have heard the news of the cancellation through the media.

The 25-storey Palm Springs project had originally been planned for completion by late 2007.Homebuyers were already believed to be angry over repeated delays, contractual issues and complaints of poor customer service by Damac.”It’s quite clear that this is just a business move by Damac,” said Miller.

“They’ve realised that the land they sold us five years ago will now go for almost three times the price, and so they’ve decided to pay us back our money and resell it at a much higher rate.”In other words, we just lent them our money for them to build a building for someone else. This is going to be very damaging for the Dubai property market and the strongest publicity is always by ‘word of mouth’; they should realise that.Miller added that in September 2006, Damac was offering 10% interest on money invested in an attempt to get investors to pull out of the project.”So this hasn’t just happened. It’s been thought out and has been planned. And if there is planning involved, then how can it be a ‘force majeure’ under any circumstances?Niall McLoughlin, senior vice president – corporate communications, Damac, said:”We understand that this is a serious and unfortunate situation, but one which is completely outside Damac Properties’ control.Dubai-based lawyer, Edward Sunna, head of construction and engineering, Al Tamimi and Company, who has been approached by the investors group to represent them, agreed that a ‘force majeure’ is mainly called for in the event of a natural disaster like an earthquake, hurricane or similar forces of nature.”I’m not sure what Damac intends to do but calling for a ‘force majeure’ in this situation is a little strange. I don’t see them getting very far with this,” he said.Damac declined to make any further comment on the story.

Helpfull Adresses Complaints

Letters of Complaints Dubai Property Investors
Write to:

email RERA at Marwan@dubailand.gov.ae
send a written complaint, accompanied by a copy of the following documentation:- signed Contract- receipt for all payments made to the Developer including reservation fee- cancellation letter from the Developer- any other letters or documents you may hold which supports the case

The letter of complaint should be addressed to Mr Marwan Ahmed Bin Ghalita, Chief Executive Officer, P O Box 1166, Dubai,UAE

All letters and scanned documents should be emailed to Khawla Madani, Legal Department, kmadani@dubailand.gov.ae
Khawla MadaniSenior Legal OfficerP.O. Box 1166Tel : +9714 2222253 Direct: +9714 2030183 Fax: +9714 2030114URL: www.rera.gov.ae

HH Sheikh Mohammed bin Rashid Al MaktoumWebsite: http://www.sheikhmohammed.co.ae/Email comments to HH here

Dubai Ministry of Finance & IndustryP.O.Box: 1565Tel: 04 3939000Fax: 04 3939738Email: mofi@uae.gov.aeMinister of State for this department is H.E. Dr. Mohammed Khalfan bin Kharbash

Dubai Government’s Department of Tourism & Commerce Marketing11th Floor, National Bank of Dubai BuildingBaniyas RoadDeira
Dubaiecomplaints@dubaitourism.ae mailto:info@dubaitourism

Government of Dubai Real Estate DepartmentP.O.Box 23073DubaiU.A.E.Tel. : 04-3986666Fax : 04-3988111

Dubai Quality GroupP.O.Box: 9278UAETel : (971-4) 343 1950Fax : (971-4) 343 1970E-mail : info@dqg.org

Government of Dubai Land DepartmentTel: 0097142222253Fax: 0097142222251Email: info@dubailand.gov.ae

Nakheel distances itself from Damac

original published Gulfnews
Damac move surprises Nakheel
By Suzanne Fenton, Staff ReporterPublished: April 04, 2008, 00:44

Dubai:
Uncertainty surrounds Damac’s cancellation of its Palm Springs project as master-developer Nakheel, which is building the Palm Jebel Ali where the project was initially planned, saying it was not informed of Damac’s decision to cancel.

Marwan Al Qamzi, managing director of the Palm Jebel Ali, said Damac’s decision came as a surprise and Nakheel learned of it through the media.

“We are very surprised by the statements made by Damac suggesting that the reasons for the cancellation of its Palm Springs project are due to revisions in the Palm Jebel Ali masterplan,” said Al Qamzi. “The Palm Springs plot was relocated to a prime position due to widening of the crescent,” he said.

“Our last interaction with Damac took place in February this year and was one of positive engagement. It left us with the firm view that Damac was proceeding with the project. We are extremely disappointed by this recent development,” said Al Qamzi.

Al Qamzi said that the revised masterplan allowed for significant improvements in the design.

Nakheel has sold other plots of land on the crescent of Palm Jebel Ali to Damac. Al Qamzi said it was now the responsibility of Damac to ensure the delivery of any units it has sold within these plots to customers.
Revisions to the Palm Jebel Ali masterplan were communicated to investors more than ten months ago.

“From Nakheel’s perspective, Damac’s cancellation of the Palm Springs project must be linked to other development issues specifically related to the project,” said Al Qamzi.

Damac was not unavailable for comment.

Finacial Times – Dubai developer faces investors’ legal threat

original published Financial Times
Wednesday, Apr 02, 2008

A group of property investors is threatening legal action against a big Dubai developer over the sudden cancellation of a residential project on Palm Jebel Ali, the second man-made island off Dubai.
DamacProperties told investors last month it would axe the Palm Springs project, which was first released for off-plan sales four to five years ago. The Dubai-based developer has offered to repay the initial cost with 6 per cent interest per year or to transfer the investment into another Damac
Properties project.

The looming clash between disgruntled investors and a big Dubai developer threatens to undermine confidence in the buoyant Dubai property market, which has soared since 2002, when foreigners were allowed to own real estate in the regional business hub.
About 70 investors, mostly from the UK, have clubbed together to lobbyDamacProperties.

Nakheel , the state-owned master-developer building the Palm islands, and the Dubai government. Some buyers paid premiums of up to 50 per cent in the secondary market, rather than buy direct from the developer.

DAMAC Properties, after selling off the apartments years ago, now faces higher costs on materials and labour amid the highly inflationary environment.
The aggrieved investors say DAMAC Properties may seek to launch a new project on the plot, selling to new investors at vastly inflated prices.

The Palm Springs Investors Group in a letter to DAMAC Properties
has asked it to confirm the cancellation by April 11 “at which time we will take legal advice with a view to commencing legal proceedings against you”.

DAMAC Properties has targeted sales from several offices across the UK, backed by high-profile advertising campaigns. Only two of 38 advertised residential buildings have been delivered to customers, say real estate analysts, but around a dozen more are scheduled for completion this year.

DAMAC Properties declared force majeure in a letter to owners last month, saying it had been forced to axe the 25-storey building – originally scheduled for completion in 2007 – as Nakheel had assigned the developer a different plot on the reclaimed, palm-shaped island. “The Palm Springs development cannot be situated on the re-a llocated plot and as a result the project has been cancelled,” Niall McLoughlin, of Damac DAMAC Properties , said in a statementNakheel
claims it told the company 10 months ago about the plots’ redesign.
By Simeon Kerr in Dubai
© Copyright The Financial Times Ltd 2008. Privacy policy.

The Sorry State of Real Estate in the UAE

original published http://blogs.zawya.com/sultan/080402073325/
The Sorry State of Real Estate in the UAE (Uncensored version)
by Sultan AL Qassimi

Posted: 02-Apr-2008

It seems like not a single day can pass without yet another extravagant announcement of a new real estate project that defies gravity, the law of nature and the laws of finance.

There is something to be said about the lack of government supervision that extends from allowing firms to issue press releases that are clearly stretching the truth to broken promises that start from delivering these real estate projects late or never, to jeopardizing the reputation of the UAE by mistreating foreign labour.

A curious case comes to mind with Tameer a local development company that claims to have 300 billion dirhams under development[1] which roughly accounts for 75% the GDP of Abu Dhabi. The firm also announced a project “in excess of $20 Billion” in Libya[2] which has a GDP of $36 Billion[3]. Does this make sense to any one as it clearly escapes my understanding? How does the government allow such press releases, and how does the local press publish it without verification. To put things into perspective, this is similar to someone claiming to have a project “in excess of $7 Trillion” in the USA (roughly 55% of the GDP). Damac Properties, which is one of the few homegrown brands to go regional claims to have a portfolio “in excess of $40 Billion[4]”. This is clearly an example of a company that bit off more than it can chew, a local news report found that out of fifteen advertised projects in Dubai that the company is developing “all are running substantially behind their projected completion schedules”[5] to the extent that investors were threatening to withhold future payments to the developer.

Oddly one of the few publicized cases of real estate developers fleeing the country after selling off plan projects to unsuspecting investors to the tune of AED 14 million has yet to be resolved[6].Copy Cats

Another issue plaguing the real estate sector that is quite interesting is the copy cat culture that is about to make our beautiful city of Dubai into a Sameville mini-me of other cities around the world. There is more than one project that promises to replicate the Eiffel Tower of Paris for example, as if copying individual landmarks wasn’t enough one project even threatens to replicate the entire city of Lyon in Dubai[7]. A contender for the most profuse project award has to be the Falcon City of Wonders that promises to replicate “the Pyramids, the Eiffel Tower, the Taj Mahal, the Great Wall of China, and the Leaning Tower of Pisa”[8]. Tatweer also has its own replication process going on within the Bawadi project. Don’t people realize that what has made Dubai great is the spirit of entrepreneurial originality? Shall we wait for a project that promises to replicate the entire city of Abu Dhabi in Dubai or maybe the holy shrine of Mecca?
Labor Pains

A different case of construction woes emerged in the Fall of 2007 when 40,000 employees of Arabtech went on strike over low wages that according to the official UAE news agency “turned into riots” with stones being thrown at the police[9], this situation could have been explosive for the entire country if one considers that the size of the Dubai police force is around 15,000[10] personnel, i.e. they were outnumbered three to one. The management of Arabtech must be proud now that they have reported a 115% increase in profits to $93 Million in 2007[11] despite the serious damage to the UAE’s reputation and social security. Basically because the company didn’t meet the laborers demands for AED 90 million increase per year (a sizeable 25% of their profit) the UAE was negatively featured on the front pages of various newspapers, websites and TV stations around the world as a country that doesn’t treat it’s “guest workers” fairly, is this worth the damage? Other Emirates Sharjah’s real estate development qualifies to be the least planned in the UAE, with problems in parking, electricity cuts, water stoppages and general frustration on the sorry state of the roads a daily headline in the local press all of which seem to be on course to staying the same. Abu Dhabi should pay attention to the plight of its sister emirates before launching humungous projects inside the relatively calm capital island that will result in traffic chaos similar to what Dubai is experiencing today.

How do we even account for such a fabulous collective failure of engineering imagination and planning? Clearly the UAE authorities were not prepared for such a fast pace of development. For a country that proudly claims to have $500 Billion worth of real estate projects under development[12] it is high time for the federal government to finally enact serious nation-wide laws and regulations that will set this haphazard industry straight.

Damac woes threaten to wobble real estate rep

http://www.kippreport.com/article.php?articleid=1105

Second Dubai property project scuttled

original published: Malaysia Sun
http://story.malaysiasun.com/index.php/ct/9/cid/3a8a80d6f705f8cc/id/343073/cs/1/

A new luxury resort development, sold-out to investors five years ago, will never be built.

Damac Properties, the biggest private developer in Dubai, has cancelled the Palm Springs project, a 25-storey residential and resort development, planned for the Jebel Ali Palm.Investors bought the 1, 2 and 3 bedroom apartments, in the project commencing in late 2003.

Damac said the property, when completed, would be managed by a five-star hotel operator.The absolute beachfront property was to have provided sea views from all apartments. With resort facilities, and the opportunity to put units in the hotel pool, the project was so popular the original selling prices almost doubled within a year.Damac however pushed ahead with building other projects, and announcing new ones across several Gulf countries. It remained tight-lipped about Palm Springs.

Buyers received scant, and vague information about when the project was proceeding.Now after five years Damac, having had the use of the funds from the sell-off, is now saying it won’t proceed and the original investors, or those than have bought on the resale market, have a choice of getting their original price back plus 6% per annum interest, or transferring their investment to another Damac property at a 15% discount.Some buyers however have paid huge premiums on the resale market, and to accept the Damac offer will leave them substantially out-of-pocket.Damac says it has no choice as the Jebel Ali Palm has been reconfigured and the plot it was to build on will now not take the original development.’Damac Properties has been advised that the master development of Palm Jebel Ali has been redesigned and the Palm Springs plot will not be delivered. Due to redevelopment of the plots, the building forming the Palm Springs development cannot be situated on the re-allocated plot and, as a result, the Palm Springs project has been cancelled,’ Hussain Sajwani, the Chairman of Damac Holdings, said in a statement.It is somewhat incredulous such an event could be taking place five years after plans were put in place, and the property was marketed.A more likely event is that construction costs have sky-rocketed since 2003, and the project based on the original prices that Damac contracted for, are now unviable.

The news of the Palm Springs demise comes hot on the heels of the failure of the Alareifi tower at Dubai Marina.

As we reported Sunday, construction of the luxury 35 storey residential Areifi Marina tower at the prestigious Dubai Marina has been halted.Major Saudi Arabian developer, Alareifi, pulled the plug on the 379-apartment project midway through construction. Investors in the property are being told Alareifi cannot complete the project. The Alareifi Marina is a unique development in Dubai in that whilst with other projects, off-the-plan buyers pay instalments in accordance with the staging of construction, Alareifi buyers paid the full price of the apartments upfront.

In return for this they received discounted prices.Dubai authorities in recent months have stepped in to regulate off-the-plan instalment payments by insisting developers open escrow accounts and deposit all funds into those accounts.

The developers are then only permitted to draw on those funds for authorised construction works.The Alareifi sales however, marketed through Khalid S. Al-areifi & Partner Real Estate, and the Palm Springs project, were all completed prior to this new regulation.

On Monday stocks on the Dubai stock exchange fell almost 3%, their biggest one-day fall in two months. The decline was led by the city’s biggest property developer, Emaar Properties, which shed 3.95%.

Palm Springs DAMAC CEO Peter Riddoch – Expert Determining the right risk mitigation strategy: reduce, accept, avoid or transfer

3rd Annual Construction Risk Management Summit
Construction Project Risk Management
May 18 – 21, 2008 · Al Murooj Rotana Hotel & Suites, Dubai, UAE

09.10 OPENING KEYNOTE:

Developing A Risk Management Culture Within Your Company

by Peter RiddochChief Executive OfficerDAMAC Properties

Balancing time, cost and quality in project risk management in your company

Successful identification and assessment of risks to quantify the possible impact on your project bottom line

Determining the right risk mitigation strategy: reduce, accept, avoid or transfer

Peter Riddoch joined DAMAC Properties in August 2003 as General Manager, Property Development, and currently serves as Chief Executive Officer at their Dubai headquarters. After training as a quantity surveyor at the Glasgow College of Building, Peter began his career in property development as a trainee with George Wimpey. He now oversees one of the most successful residential, leisure and commercial developers in Dubai and the Middle East, and the company is expanding rapidly into North Africa, Jordan, Lebanon, Qatar and the Far East. The company’s portfolio includes properties spread across 450 million square feet and is worth in excess of US$18 billion

Al Fajer Properties without any respect – Damac Victims are not alone

original published Arabian Business
http://www.arabianbusiness.com/515147-palm-spring-investors-face-millions-in-losses-

Damac Victims are not alonePosted by Falcon, Munich, Germany on 1 April 2008 at 03:00 UAE time

The victims of Damac are not alone. They bring to daylight what happens day by day in Dubai.

We bought 2005 Falcon Tower JLT directly at Nakheel.

We paid 45% until June 2006.

In August 2006 we got a letter from DMCCA.

Falcon will not be built – a decision of Nakheel.
But we were told the Falcon Tower would be transfered to AL Fajer Properties, nothing would change for the customers.

Today, 2008, we are getting letters from the lawyer of Al Fajer Properties trying to cancel every right to our purchased apartment.

We have got our own lawyer – but they have refused to correspondence with him.

The case is with RERA – but until today without any response.

Further information:

http://www.dubai7stars.com/

Dubai Property Investors frustrated with delays

Investors frustrated with delay in Jumeirah project
By Robert Ditcham, Staff ReporterPublished: March 26, 2007, 00:00

Dubai: News that approximately half of the Dh7.3 billion Jumeirah Beach Residence (JBR) project will be handed over to buyers later than the scheduled delivery period, has heightened frustration among investors.
Project developers Dubai Properties said in January that the entire project would be completed and delivered between March and May 2007, but according to information obtained by Gulf News, keys to apartments in sectors C and D of the project will be handed to buyers after June.
According to a map of the site, sectors C and D make up approximately half of the overall project and represent the project’s main residential zones.
The news comes as a further blow to Cem Pozam, a Turkish national who lives in Dubai and paid Dh1.4 million for a permanent home in JBR.
“I am furious over repeated delays in construction. I am trying to stay positive as much as I can, however it frustrates me more when there is a big lack of transparency,” he said, referring to what he called lack of information over the delivery time-table.
Numerous other buyers have contacted Gulf News in recent weeks to voice their frustrations over JBR’s delays. Most complained about “lack of information” over the completion schedule, rather than the delay itself.
“I purchased an apartment in May 2003 with a completion date of second quarter 2005. I still don’t have a firm date for handover. Living in England makes getting information difficult,” said a UK investor.
“I am one of those who has bought an apartment in JBR and due to delays, gone through very difficult time with my family,” added a Dubai-based buyer.
Dubai Properties declined to comment on this story.

Palm Springs investors face millions in losses

original published: Arabianbusiness.com
http://www.arabianbusiness.com/515147-palm-spring-investors-face-millions-in-losses

Devastated investors in Damac Properties’ axed development on the Palm Jebel Ali are facing millions of dirhams in losses, one of the project’s investors has told ArabianBusiness.com.

The Dubai-based developer recently cancelled the much-delayed Palm Springs project five years after launch, citing “redevelopment of the plots”.

The developer has offered investors compensation of 6% annual interest on the original purchase price and the option of transferring their investment to another project with a 15% discount

Many buyers have snapped up Palm Springs units on the secondary market, meaning off an investor and not directly from the developer, paying up to a 50% premium on the original purchase price.Prior to the cancellation of the project, Palm Springs units were estimated to be worth more than double the original purchase price, according to investors.Investors are now threatening to take Damac to court if it does not reverse its decision and continue with construction.Nearly 60 UK-based investors in the project have formed a group to take on Damac, giving the developer until April 11 to reverse its decision or face legal action.London-based investor Karl Brown told ArabianBusiness.com members of the group were facing average losses on their investment ranging between 300,000-600,000 dirhams ($81,000-$163,000), depending on when they purchased their unit.Brown said he bought his Palm Springs apartment on resale in March 2006 for 1.5 million dirhams and believes the property is now valued at more than 2.2 million dirhams.However, he will only receive the original purchase price, estimated at about 1.1 million dirhams, plus 6% interest for each of the five years since the project’s launch.Brown said Damac had told him it was not the developer’s contractual obligation to refund money that was paid on resales.Brown said UK investors’ losses were compounded by the rising value of the British pound against the dirham.Many investors purchased their units when the exchange rate was 6.4 dirhams to the pound, while the exchange rate is now around 7.3 dirhams to the pound, he said.Brown said the group, the Palm Spring Investors Group, was appealing to Dubai’s Real Estate Regulatory Authority (Rera) and Nakheel, master developer of the Palm Jebel Ali, for assistance with the dispute.Damac was not immediately available for comment, but in a statement issued earlier the developer said it understood the situation was serious and unfortunate, but that it was “completely outside Damac Properties control”.“Due to redevelopment of the plots, the building forming the Palm Springs development cannot be situated on the re-allocated plot and as a result, the Palm Springs project has been cancelled, Niall McLoughlin, senior vice president of corporate communications at Damac Holding, said in the statement.“Damac is committed to its customers and in view of this cancellation, Damac Properties will provide customers an opportunity to release the investment made at Palm Springs and transfer the monies to any other project in the Damac Properties portfolio at a discounted price 15% below current market.”The 25-storey Palm Springs project had originally been planned for completion by late 2007, and buyers were already angry over repeated delays, contractual issues and complaints of poor customer service by Damac.

Comments

These are the kind of Developer that Distroy the Market Confidence
Posted by Sam Wahib, Dubai, UAE on 1 April 2008 at 17:47 UAE time

It is amazing to see the effort and amount that Damac spends on ADVERTISING…. while they do NOT spend enough effort on delivering on their promises. Other than 2 buildings in Dubai Marina, I’m not aware any othe project that was delivered out of the 50+ project they sold….In addition, and not a single Damac project has been delayed less than one year. I can not imagine a project that was supposed to be completed in 2007, just gets cancelled NOW (after the completion date). These investor must have paid in 2004, now they will just get 6% interest while they could have got 200% to 300% return if they would have invested these sums in any other project in Dubai When you deal with such developer you should look carefully at the contract, and make sure that you are covered with proper compensation should this happen to you

Update facts
Posted by Ilyas, London on 1 April 2008 at 17:00 UAE timeNo one apart from Damac is really in the wrong here, Lee talks about who should be sued, the only ones who have gone back on anything are Damac. The have been given a Plot by Nakheel, but they will obviouly get a lot more money by selling it afresh then re designing and leaving it with the original investors. I think most people cant grasp the simple con that is being carried out here – Nakheel have redesigned but have delivered on there side of giving plots – Damac want to make more money by selling at new prices so are trying t cancel peoples contracts. One thing about unavoidable delays but completely cancelling investors contracts and offering 6% per annum so then can then sell at 300% of the orginal price that is a con………..

Damac and the fun and games
Posted by Mike H on 1 April 2008 at 16:53 UAE time

Damac have been selling off plan now for 5 years. They must surely have sold 60 plus developments. In that period they have handed over 2 buildings if my memory serves me. It seems to me that its all about taking in the cash that they can and skirting around the deliverables with excuses like this. Before the escrow was introduced what was happening to all that money?Hmmm interesting. I wonder how their developments in Egypt and Jordan are faring. Maybe Palm Springs is financing those.

Palm Springs Mess
Posted by Lee, Dubai, UAE on 1 April 2008 at 15:18 UAE time

Wow! Lots of opinions on this one!!! I feel for the investors, end users, speculators, etc. who will not be receiving their property. And for those who were secondary buyers, well, these buyers could lose big time depending on the premiums they paid. But who should be sued or held accountable? -Should Damac sue Nakheel as one of the Palm Springs investors suggested? I guess they could but then Damac would never receive another plot in any Nakheel development ever again. I would be surprised if any Middle East master developers would ever want to work with Damac. Is Damac going to risk that??? I don’t think so. -And who is to say when Nakheel told Damac? I think we need Nakheel to “clear the air” and come forward with the facts on this plot and their communications/dealings with Damac.-Should previous owner’s be sued for their premiums? Who is to say they were not “tipped off” to problems and told to sell by Damac executives? I bought a property in JLT and a year later one of the representatives told me how late the project would be and that the finishes were going to be rubbish. He recommended I sell if I could which I did. If you think buyers are not gettings “tips” for when to buy or sell in this market you are being naive.Is anyone really surprised this happened? If anything I am surprised it took this long for it to happen. Developers are buying plots and less than a year later they are selling flats off plan, sometimes before master developer’s complete the infrastructure works. This was bound to happen. My wife and I bought a flat in 2005 only to have the building completely redesigned in 2006. We ended up with a flat on a lower floor because that was all that was left for us. I knew then the whole real estate game in Dubai was going to be risky until the government introduced laws to regulate the “monkey business”. But at the end of the day, this is still the wild frontier. There may be Escrow accounts, but where are the penalties for projects handed over 1, 2 or 3 years late? Who knows how this will turn out…..but I am going to sit back and watch the entertainment!

The Damac fiasco
Posted by Plam Springs Investor, UK on 1 April 2008 at 14:05 UAE time

“As stated before in this thread; sit back and watch and enjoy.” KieranWhat about the first rule of good government, of regulating the real estate industry? I’m sure you wouldn’t be sitting back and enjoying things if your local Wimpy builder did the same to you if they felt their profit margin had become too small to make it worthwhile to deliver the property you had purchased several years ago….”The Dubai Real Estate is like a gambling table, you speculate & invest. The chances of making it big is high but if you lose, you do not blame the casino, you blame your self.” The ThinkerYou have a very poor opinion of Dubai – simply a huge gambling place billing itself as being run along Islamic principles. The Sheikh of Dubai paints a very different picture of Dubai…”Don’t you people who speculate on a value of something that is not happening see that you too pump up the bubble a little too much, and are really helping the same developers whom you want to sue now?”You do not seem to understand the simple fact that Damac have renegaded on the contracts given to investors not because of any property bubble, but SIMPLY TO STEAL MONEY THAT RIGHTFULLY BELONGS TO INVESTORS. It is not as if they do not have money to pay compensation at current market rates, or do not have a plot on the Palm Jebel Ali to build the Palm Springs project.

Palm Springs
Posted by theshadow, Dubai, UAE on 1 April 2008 at 13:51 UAE time

It may not be criminal but it’s shady as you can imagine. Not only DAMAC are to blame though, the real estate industry here is equally guilty of distorting reality in their efforts to get people to buy buy buy.I just don’t see how this works though – surely if a developer announces a development and offers it for sale they’re obligated to deliver the project as advertised? If not, that says a lot about the maturity of the real estate industry here and the type of people it has attracted. I’d rather spend my hard-earned money elsewhere on something solid instead of a coloured, computer rendered bubble that might burst at any given moment for no valid reason. It really is ludicrous.

Facts
Posted by Ilyas, London on 1 April 2008 at 12:18 UAE time
Some people dont seem to understand what this is about. Nothing to do with volatile markets, because if the value had gone down that is something the Investors understand, nothing to do with workmanship, oversupply blah blah. Damac have used investors money to buy the plot, and then when the price goes through the roof they want to renege on the their committments and sell it for more.People posting on here talking about falling markets and all the rest this simply is nothing to do with the issue, investors paid for something on Palm Jebel Ali and thats what they should get. Not some shoddy excuse about a redesign.AND if the price had collapsed ofcourse Damac would then have said to the investors to buy in a redesigned palm springs, just so happens they have seen an opportunity to make more money buy selling them afresh.

First Rule of Investment
Posted by Kieran, London, UK on 1 April 2008 at 10:57 UAE time

Only fools think that high returns are not the reward for high risks…These investors can persue this claim but they need to risk having the world know they were either gullible enough to think this was a guaranteed return or thought they were party to some nefarious deal whereby their returns were guaranteed unless, of course, DAMAC or their agents gave them assurances that there would be a massive return, thereby, through that assurance, underwriting the risk.However, that may well indeed be the case. UAE sales agents (and there are so many of them these days) with their hyperbolic talk about massive returns and guaranteed investments may be advised to have their lawyers double check their publicity material and make sure their staff are trained well or this lawsuit and future ones could start to cascade down the property-boom feeding chain eating the weak.The authorities have recently, and rather belatedly, been taking steps to regulate these sales and are to be applauded for that but, unfortunately, a lot of things were said and done pre-regulation, that might come back to haunt the market.That coupled with the fact that there is a huge amount of property just now coming to completetion so the builders must be praying that their new owners are too ill educated or naiive to spot the shoddy workmanship and poor finishing prevalent in the region and launch a tidal wave of warranty claims for repairs and bringing properties up to the standard portrayed in the sales publicity. There is no evidence to suggest that most of the developers actually have the kind of solid, cash, foundations and secured credit lines to survive any major turbulence in this market, let alone to go paying out compensation back to burnt investors or aggrieved owners.Caveat Emptor and nowhere is this truer than buying “off plan”.As stated before in this thread; sit back and watch and enjoy.

Who’s to blame?
Posted by The Thinker, Dubai, United Arab Emirates on 1 April 2008 at 10:31 UAE time

Well, who is to be blamed, is it DAMAC who just promotes but never forces a investor to buy or is it the investors pouring in millions without seeing a brick on ground. There a very true old saying, ‘SEEING IS BELIEVING’ & there is a counter line that says that only the risk takers reach the top (but for the risk takers, it can be rewarding or a dive in the dump while the believers would have lost a good opportunity if it was really good later).The Dubai Real Estate is like a gambling table, you speculate & invest. The chances of making it big is high but if you loose, you do not blame the casino, you blame your self. After all, before & after investing, you believed in speculation (until DAMAC’s announcement) and took a very strategic decision.

Palm Springs mess
Posted by George, Dubai, UAE on 1 April 2008 at 09:45 UAE time

Well …If Nakheel redesigned the plots, then Damac should have either informed the investors in time, or sue/ask for compensation/alternative plot(s) of the same properties from Nakheel now. While I can feel sorry for the original investors, the ones asking for the compensation of the secondary sales are obviously not entitled to any refund beyond the original price and any interest that the developer is accepting. Their risk – as long as they thought that the value is going up, they kept quiet, right? – and their loss. They would be happy if the project went through and they had 100% returns on the investment.And, I really fail to see how a flat that is never going to be built can be valued, let alone worth millions??? Don’t you people who speculate on a value of something that is not happening see that you too pump up the bubble a little too much, and are really helping the same developers whom you want to sue now? Compound greed … great!Let’s kick back and watch … the game is on …

Palm Springs
Posted by stuart mayhead, Abu Dhabi, UAE on 1 April 2008 at 08:17 UAE time
So is this going to be when they judge the bubble to have burst? Or is it just a leak….
Damac’s action tantmount to

FRAUD
Posted by Palm Springs Investor, UK on 1 April 2008 at 04:24 UAE time

“Damac said it understood the situation was serious and unfortunate, but that it was “completely outside Damac Properties control”.”What a load of codswallop. Damac has known about the re-design of the Palm Jebel Ali for ages, and I’m sure Nakheel would have kept them informed of progress in the re-design. It’s astounding for Damac to suggest that it has ’suddenly’ learned that the original plot will not be delivered, and so has had to cancel the project. Damac seem to think that those who invested in the Palm Springs are a bunch of brainless fools who are not able to see through this LIE.If Damac are not able to honour their contracts for failure to deliver by Nakheel, then they should be suing Nakheel, rather than penalising investors with whose money Damac has had all of these years.It is extremely surprising that the Dubai authorities are not stepping in and investigating Damac, if not on investors behalf, then to safeguard the reputation and of Dubai as a safe place to invest.These latest comments by McLoughlin reveals that Damac’s business ethos is driven by greed, and I applaud Brown and the Palm Springs Investors Group for standing up to Damac’s underhand illegal tactics

ArabianBusiness.com Damac threatened with lawsuit after project axed

original published: arabianbusiness.com 31.March 2008
http://www.arabianbusiness.com/514985-legal-action-threatened-after-damac-axes-project

Investors in Damac Properties’ Palm Springs project on the Palm Jebel Ali are threatening legal action after the developer cancelled the venture five years after launch.The project was axed due to changes made to the Palm Jebel Ali masterplan, which meant Damac would suffer a significant loss if it continued with the venture, according to UAE daily Gulf News.Investors are unhappy with the compensation offered by Damac, which said it would only offer 6% per annum interest on the sum invested, the newspaper said.

The cost of real estate in Dubai surged up to 15% in 2007, according to Egyptian investment bank EFG-Hermes.Damac has said it will either refund customers’ investment or allow them to transfer their investment to any other project in its portfolio at a discounted price of 15% below current market value.“Due to redevelopment of the plots, the building forming the Palm Springs development cannot be situated on the re-allocated plot and as a result the Palm Springs project has been cancelled,” Hussain Sajwani, chairman of Damac Holding, said in a statement carried by Gulf News.The 25-storey Palm Springs project had originally been planned for completion by late 2007, and buyers were already angry over repeated delays, contractual issues and complaints of poor customer service by Damac. Damac currently has real estate interests worth $30 billion across Dubai, North Africa, Jordan, Lebanon, Qatar and Saudi Arabia. The developer announced in September that it has launched a total of 79 towers across the region over the last five years, all of which are in various stages of construction.

Comments:

Damac Victims are not alone
Posted by Falcon, Munich, Germany on 1 April 2008 at 03:00 UAE time

The victims of Damac are not alone. They bring to daylight what happens day by day in Dubai.We bought 2005 Falcon Tower JLT directly at Nakheel.We paid 45% until June 2006. In August 2006 we got a letter from DMCCA. Falcon will not be built – a decision of Nakheel.But we were told the Falcon Tower would be transfered to AL Fajer Properties, nothing would change for the customers.Today, 2008, we are getting letters from the lawyer of Al Fajer Properties trying to cancel every right to our purchased apartment.We have got our own lawyer – but they have refused to correspondence with him.The case is with RERA – but until today without any response.

damac Plam Springs
Posted by Richard, London, UK on 1 April 2008 at 01:35 UAE time

DAMAC- Palm Springs this was a dream Five years ago and now in 2008 a COMPLETE nightmare.
Damac’s treatment of its clients
Posted by Sanj, London on 31 March 2008 at 20:31 UAE time

I am outraged at the way Damac have treated us. We have accepted delay after delay and been loyal to this project for the past 5 years. Many of the purchasers can no longer afford to get into the Dubai market let alone a comparable apartment on Palm Jebel Ali. It has been rumoured that Damac has canceled this project because they do not stand to make the financial gain because of the increase in construction costs in Dubai. A penalty that we the buyers are having to bear. We hope that Dubai will make an example of Damac and insist that they fulfill their contractual obligations.

Palm Springs
Posted by jo on 31 March 2008 at 18:05 UAE time

We the investors of Palm Springs are disappointed by what appears to be a unilateral cancellation of the Palm Spring project at Palm Jebel Ali. Following the purchase of our apartments in this project in 2004, Damac thanked each of us “for placing your trust in our company and making this investment in Palm Springs,” It is clear that this trust has morally and contractually been misplaced. Damac have abandoned their duty of care towards their loyal investors. Having relied upon your representations, and remained loyal to the project, despite numerous set backs and delays, we have been rewarded by their abandonment of the project. By canceling the entire project, Damac has set a worrying precedent. This will inevitably have a major impact on the commercial credibility and trustworthiness of Damac in delivering on both current and future developments in Dubai.

Ethics?
Posted by Ilyas, London on 31 March 2008 at 15:19 UAE time

Remember that Damac HAVE been give a plot by Nakheel, and they are using this as an excuse to get out of honouring the investors who bought early. Damac will get 3 times the amount from new investors so thats why they want to return the money to the investors. If the investors had put their money into virtually any reputable developer in Dubai they would have seen a nice return. All the time Damac would have presentations and tell people how much money their investors were making, they should now tell people that they cancelled a project so they could sell it for more to new investors!

Palm Springs Cancellation
Posted by Terry, UK, UK on 31 March 2008 at 15:17 UAE time

I am shocked and disappointed by Damac cancelling Palm Springs Project. I believe that Damac acted illegally and breached the contract with their investors.I feel angry and hurt together with my family because our dream of having our apartment in Palm Springs has been shattered by Damac after nearly five years of waiting, where the prices in Dubai since have more than tripled and we cannot afford to buy any comparable apartment at the current market price.Damac must honour their commitment to their investors without giving us unacceptable excuses. Damac has several plots in Palm Jebel Ali you can build Palm Springs or redesign it.

Damac Palm Springs
Posted by Robert Miller, Newport, UK on 31 March 2008 at 14:57 UAE time

Having bought in to Palm Springs in 2003, the amount Damac are offering will mean that I cannot afford to purchase another property. Put simply, Damac could not build at a profit so will not build at all. Come on Mr Riddoch, do the lawfully and morally correct thing and return to us our investment and the growth we had earned by supporting you in your infancy. Last November I should have received a luxury apartment, instead I am going to receive less than I gave you and a similar apartment will now cost more than three times the price.Just how many apartments have Damac actually built, review the amount they have sold and the amount they have actually built. They are a problem waiting to happen.

Palm Springs
Posted by Palm Spring Investors Group, United Kingdom on 31 March 2008 at 12:37 UAE time

Just a small matter of all those who bought on resale, they have lost anything up to £150,000…Damac will not look at this issue and not refund the premiums. Why should Damac cancel the project when they still own the plot. It has only being relocated and they can redesign the Palm Springs…They will wait a year or two and resell units built at the site for overinflated prices and make a large profit instead of a large loss.

Damac cancels Palm building
Posted by Bob on 31 March 2008 at 09:44 UAE time

They have been using the investors money over the past 5 years to build and build and now we are offered 6% ROI?? DAMAC “Live the Luxury” Yeah right!

Damac
Posted by Heba, Dubai, Egypt on 31 March 2008 at 08:41 UAE time

I am not sure why people are angry, Damac is giving them two options, (1) get back your money with interest or (2) get another property for a discounted price.Damac has not taken the money and fled away. It is a company trying to do the right thing for its customers. I can imagine how customers are angry becuase they thought they can make a profit out of the property, but this in itself shows that the customers motivation for anger is also greed..In fact, the more people get angry and follow the herd, they stand to lose more ..

Showing True Colours!
Posted by Louie Tedesco, Dubai on 31 March 2008 at 08:28 UAE time

Thank you Damac for showing the world your real character – which is not the friendly, caring, persona that you try to typify on your glossy brochures and advertising. Your actions, after five years of sitting on customer down payments, by refusing to honour a huge contract with an international consortium of investors has added one more argument to not buying property or investing in Dubai. In this modern era, people do talk, they send emails around the world and the internet is too open for such a breach of contract to remain hidden from the public. The right thing to do is to step forward, fulfil contractual obligations made five years back, suck up the loss now and move on to reap future profits that lay ahead. Until then, my money stays in my (foreign offshore) bank.

Management has no understanding of reputation
Posted by Dubai Warrior on 31 March 2008 at 06:26 UAE time

It seems that the incredible greed of Damac is strong enough to obscure its management from the potential incredible losses it can incur thanks to a tarnished reputation.How many investors do they think will now be willing to put their money in their next project after the company forced the situation to become this public.The real estate market is shaky and without restoring confidence it can implode like a bubble as many have already said. The fact that it takes time for the effect to happen does not mean it doesn’t happen, or haven’t we learned from the stock market crash two years ago?

Damac threatened with lawsuit after project axed
Posted by H L Nagpal, London, United Kingdom on 30 March 2008 at 21:32 UAE time

It is foolish for a company like Damac to back out from a project just because it is going to make a loss. If Damac does not care about its goodwill, the UAE Government should make it honour its obligations as otherwise its effect will be far reaching. Investors in the West are investing heavily in the upcoming real estate of UAE on the understanding there is rule of law. Damac have launched projects at heavily inflated prices which are going to bring bumper profits to the Company. If the company is going to walk away from its contractual obligations, its effect on other projects by other developers will be enormous. One bit of bad news can ruin the whole market. The writer has no interest in the project and is concerned on a matter of principle.

Extract of cancelled Towers in Dubai

• The Pinnacle 120 cancelled (1)

• Park Square Tower 666.0 m 150 cancelled

• Unnamed Residential Tower 430.0 m 111 cancelled (1)

• Badriya Tower 415.0 m 96 cancelled (1)

• Cancelled Mixed Use Tower 390.1 m 77 cancelled

• United Tower 350.0 m 84 cancelled (1)

• Emirates Hotel 350.0 m 70 cancelled

• Najd Tower 340.0 m 82 cancelled (1)

• Four Seasons Dubai Festival City 320.0 m 72 cancelled

• Marina Gardens 310.1 m 75 cancelled (1)

• Al Durrah Tower II 300.0 m 78 cancelled

• Dubai World Trade Tower 2 300.0 m 60 cancelled

• Dubai World Trade Tower 1 300.0 m 60 cancelled

• The Hexagon 290.0 m 62 cancelled (1)

• Promontory Tower 55 cancelled

• The Tower 65 cancelled

• Dubai Chamber of Commerce Tower 1 50 cancelled

• Beach Towers 235.0 m 45 cancelled

• Marina Tower 205.0 m 51 cancelled (1)

• Al Ghurair Lake Office Tower 200.0 m 44 cancelled

Name Height Floors Status Year Drawings

• Damac Head Quarters 180.0 m 40 cancelled

• Al Ghaith Tower 165.0 m 44 cancelled

• Pacific Tower 160.0 m 40 cancelled

• Mercure Grand Hotel Tower 160.0 m 35 cancelled (1)

• The Monaco Tower 150.0 m 40 cancelled

• The Etoile Tower 150.0 m 40 cancelled

• Nakheel Flamingo Tower 150.0 m 40 cancelled

• Nakheel Falcon Tower 150.0 m 40 cancelled

• Manchester Plaza Tower 145.0 m 38 cancelled

• Al Ghurair Lake Residential Tower 135.0 m 35 cancelled

• Arshia Marina 134.0 m 35 cancelled

• Arabian Heights 95.0 m 15 cancelled

Damac Promises in 2003 – Dh300m Palm Springs project unveiled by Damac Properties

Original published Khaleej Times
http://www.khaleejtimes.com/DisplayArticleNew.asp?section=business&xfile=data/business/2003/november/business_november195.xml

BY A STAFF REPORTER 9 November 2003

DUBAI -

Damac Properties yesterday unveiled in Dubai a new Dh300 million waterside property called the Palm Springs.
The new scheme, which provides 250 luxury one, two and three bedroom apartments, including penthouses, will be located on the crescent of Palm Jebel Ali.
Hussain Sajwani, chairman and chief executive officer of the Damac Group, said that within Palm Springs are a diverse range of commercial, business, retail, leisure, parking and lifestyle facilities, providing an outstanding home that offers the quality and services of a world class hotel: a resort destination in its own right.
He also said that all the residential projects launched by Damac till now have done very well with Marina Terrace, the Waves and Palm Terrace already sold out. Also 65 per cent of Lake Terrace has been sold out, he added.
Sajwani said that the coming of more new projects in the Dubai market is not impacting the pricing in the property market that is just about opening up to the 1.8 billion residents in the region including the Indian subcontinent.
“I am very bullish on the Dubai property market and do not agree to the view that the market is over supplied. In fact, we are at the beginning of a boom in the property market that has a long way to go. Dubai is emerging as a great holiday destination, which will further boost the demand in the local property market,” he said.
On the new project, he said that the scheme has private landscaped grounds, beaches and a man-made peninsula and marina that stretches out into the Arabian Gulf to a new island restaurant.
Scheduled for completion in 2007 and designed by award winning architects WBTL, Palm Springs forms a wave shaped arc that rises to an equivalent of 17 storeys at its central apex.
Sajwani said that among a host of other services, residents at the new property will have a concierge managed by a leading international hotel operator. There will be also a water taxi service from the private marina, which will link Palm Springs with other islands that form the palm with their diverse range of shopping, leisure and commercial facilities.
“Palm Springs is one of the most exciting and outstanding address: both a home and a resort destination, enhanced by the very best luxury hotel level service. The homes offer an ideal opportunity to homeowners and investors looking for an exclusive and world class real estate investment,” he said. Wahid Attalla of Nakheel said that the Palm Jumeirah has been fully sold out and with Palm Springs, Palm Jebel Ali, which is 40 per cent larger than Palm Jumeirah, has now been opened up.
Replying to queries on the legal issues related to owning properties by non-nationals in Dubai, he said that there are no laws in the country that bar foreigners or expatriates residing in the UAE from buying properties. Besides, now the federal and the Dubai governments are in the process of drafting a law that would provide a proper legal infrastructure for the business of property and real estate in the country.

Millions lost in Dubai Property Scandal – Light House Tower Dubai Marina

original published 7days

http://www.zawya.com/providertracker.cfm?http://www.7days.ae/&provider=7 Days

24 May 2006
The abandonment of a 15-story project at Dubai Marina has led to investor fears over the safety of money ploughed into the Dubai property market. Construction has completely halted at the Light House project, leaving over 90 investors up to four million dollars out of pocket. Meanwhile, the scandal threatens to damage the reputation of Dubai as a destination for investment.

“We chose Dubai because we were assured that investors’ money would be safe,” Roger Blakeley, one of the investors, told UK newspaper, The Times. “It’s time for Dubai to show that foreign buyers have rights and are protected when things go wrong,” he said.

The affected investors in the UK are highlighting the complex legal system for buyers in the UAE. The fact that the developer, Emad Ayoub, has successfully dumped Dubai and the project is also worrying for foreign investors coming to the UAE. Ayoub has a dual nationality, he is a citizen of both Britain and Egypt. He originally sold the building from plans.

Investors have already paid up to dhs400,000 each in deposits to the developer for luxury apartments in the building. The site of the planned project has been closed by the Dubai Court. Ayoub was tracked down by The Times newspaper in the UK and found to be living in Northhampshire, England. While he admitted to fleeing from Dubai, he said that it was because he feared imprisonment over his financial difficulties.

The developer denied deliberately taking investors’ money but said that technical hitches and unforeseen construction work had delayed work on the project. He said he ran out of cash and stopped paying his workers in March after a bank in Dubai refused to give him further credit. Ayoub claims that all of the investors’ money has been tied up in the construction. “Not one single dirham invested in the Light House has left my accounts in Dubai. It was all invested in the project,” he said.

He also said he sympathised with buyers and was working to negotiate with sub-contracters to restart the building. Emaar is the master developer of Dubai Marina but has no direct responsibility for the Light House project. The group of investors have said they may approach Emaar and ask it to take over the project and finish it if they are unsatisfied with the courts.

“We have had meetings with the legal representatives of the third party investors and will continue to cooperate to review what is in the interests of the concerned parties,” an Emaar spokesperson told 7DAYS yesterday. It is the first test of Dubai’s investor-protection laws.The group are also considering taking a criminal action against Ayoub for fraud.

Whatever happens, other investors considering entering the UAE market are closely watching the legal mess. While the Light House buyers have found themselves in the dark

© 7Days 2006

Al Khaheel Park Project – Another simply cancelled Project

original published: http://www.skyscrapercity.com/showthread.php?t=380459&page=2

AL Khaheel Villas in Portfolio of ACI ALternative Capital Real Estate Dubai

http://www.aci-dubai.net/downloads/getFile.php?id=15.pdf&name=Property%20Mirror%20Second%20Quarter%202007

Taktic of cancellation Dubai Devlopers – Nakheel – DMCCA – Al Fajer Properties – Falcon Tower Jumeirah Lake Towers Plot H3

original published:

http://www.skyscrapercity.com/showthread.php?t=138300&page=3